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date: 23 April 2024

Healthcare System Challenges in Asiafree

Healthcare System Challenges in Asiafree

  • Winnie YipWinnie YipDepartment of Global Health and Population, Harvard T. H. Chan School of Public Health


Important health system challenges in the east and southeast Asian countries/territories of Japan, South Korea, Taiwan, Hong Kong, Malaysia, China, Thailand, Vietnam, Indonesia, the Philippines, Laos, Myanmar, and Cambodia exist. The most commonly adopted health system among these areas is social health insurance. The high-income, aging societies of Japan, South Korea, and Taiwan have adopted single-payer/single-pipe systems with a single uniform benefit package and a single fee schedule for paying providers for services included in the benefit package. All three have achieved universal coverage with relatively equitable access to affordable care. All grapple with overutilization, aging populations, and hospital-centric and curative-focused care that is ill-suited for addressing an increasing chronic disease burden. Rising patient expectations and demand for expensive technologies contribute to rising costs. Korea also faces comparatively poorer financial risk protection.

China, Thailand, Vietnam, Indonesia, and the Philippines have also adopted social health insurance, though not single-payer systems. China and Thailand have established noncontributory schemes, whereby the government heavily subsidizes poor and non-poor populations. General tax revenue is used to extend coverage to those outside formal-sector employment. Both countries use multiple, unintegrated schemes to cover their populations. Thailand has improved access to care and financial risk protection. While China has improved insurance coverage, financial risk protection gains have been limited due to low levels of service coverage, fee-for-service payment systems, poor gatekeeping, and the fee schedule that incentivizes overprescription of tests and medicine. Indonesia, Vietnam, and the Philippines use contributory schemes. Government revenue provides insurance coverage for the poor, near-poor, and selected vulnerable populations; the rest of the population must contribute to enroll. Therefore, expanding insurance coverage to the informal sector has been a significant challenge.

Instead of social health insurance, Hong Kong and Malaysia have two-tiered health systems where the public sector is financed by general tax revenue and the private sector is financed primarily by out-of-pocket payments and limited private insurance. There is universal access to care; free or subsidized, good-quality public-sector services provide financial risk protection. However, Hong Kong and Malaysia have fragmented delivery systems, weak primary care, budgetary strains, and inequitable access to private care (which may offer shorter wait times and better perceived quality).

Laos, Cambodia, and Myanmar’s health systems feature high out-of-pocket spending, low government investment in health, and reliance on external aid. User fees, low insurance coverage, unequal distribution of health services, and fragmented financing pose pressing challenges to achieving equitable access and adequate financial risk protection.

These countries/territories are diverse in terms of demographics, epidemiological profiles, and stages of economic development, and thus they face different health system challenges and opportunities. This diversity also suggests that these nations/territories will utilize different types of health systems to achieve universal health coverage, whereby all people have equitable access to affordable, good-quality care with adequate financial risk protection.


  • Health, Education, and Welfare Economics

Universal Health Coverage in Asia

Achieving universal health coverage (UHC)—providing all people with affordable and equitable access to good-quality care with adequate financial risk protection—is a global quest in which Asia plays an important role. Asia is unique because, as the most populous region in the world, it consists of a diverse set of countries in terms of economic development, demographic and epidemiological profiles, political systems, historical background, and culture. This article includes discussions on the east and southeast Asian countries/territories of Japan, South Korea, Taiwan, Hong Kong, Malaysia, China, Thailand, Vietnam, Indonesia, the Philippines, Laos, Myanmar, and Cambodia. It does not include south Asia or central Asia, as including these subregions would be too complex for any in-depth analysis in a single article.

Even the east and southeast Asia subregions alone are very diverse in terms of stage of economic development, demographics, and epidemiology (Chongsuvivatwong et al., 2011). At one extreme are economies like Hong Kong and Japan, with gross domestic products (GDPs) similar to (or surpassing) those of the United States and other Organisation for Economic Co-operation and Development (OECD) nations. Their human development indexes rank among the top 25 out of 189 countries. They are also highly urbanized, with at least 80% of their populations living in cities (see Table 1). At the other extreme are Laos, Myanmar, and Cambodia, which share development statuses similar to low-income countries in Africa and have lower human development indexes (see Table 1); these countries have ended civil wars and dictatorships only within recent decades, and they are still struggling with necessities such as clean water and electricity. Falling in between are economies in transition from low to middle or higher-middle income, such as China, Indonesia, the Philippines, Thailand, and Vietnam.

Table 1. Country Economic, Demographic, and Epidemiological Profile


South Korea







Hong Kong





Economic Development

GDP per capita (current US$) (2017)














GDP per capita growth (annual %) (2017)














2017 Human development index (rank out of 189)





0.755 (83)

0.694 (116)

0.699 (113)

0.694 (116)

0.933 (7)

0.802 (57)


0.578 (148)

0.582 (146)

Poverty headcount ratio at $1.90 a day (2011 PPP), % of population, (year)

0.2 (2008)

0.2 (2012)


0.7 (2015)

0 (2015)

5.7 (2017)


2 (2016)


0 (2015)

22.7 (2012)

6.4 (2015)



Population, total (2017)














Population growth (annual %) (2017)














Urban population (% of total) (2017)



78.2 (2018)











Population 65 and older (% of total) (2017)














Fertility rate (births per woman) (2016)



33 (2017)












Life expectancy (2016)














Infant mortality rate (per 1,000 live births) (2017)









1.6 (provisional)





Maternal mortality ratio (modeled estimate, per 100,000 live births) (2015)



9.8 (2017)






0.0 (2016)





Top five causes of death (2016)

Alzheimer’s disease, ischemic heart disease, cerebrovascular disease, lower respiratory infection, lung cancer

Cerebrovascular disease, Alzheimer’s disease, ischemic heart disease, lung cancer, liver cancer

Ischemic heart disease, cerebrovascular disease, Alzheimer’s disease, diabetes, lung cancer

Cerebrovascular disease, ischemic heart disease, COPD, lung cancer, Alzheimer’s disease

Ischemic heart disease, cerebrovascular disease, lower respiratory infection, Alzheimer’s disease, liver cancer

Ischemic heart disease, cerebrovascular disease, tuberculosis, diabetes, COPD

Ischemic heart disease, cerebrovascular disease, lower respiratory infection, chronic kidney disease, tuberculosis

Cerebrovascular disease, ischemic heart disease, Alzheimer’s disease, lung cancer, COPD

Malignancy, pneumonia, heart disease, cerebrovascular disease, external causes

Ischemic heart disease, lower respiratory infection, cerebrovascular disease, Alzheimer’s disease, road injuries

Ischemic heart disease, lower respiratory infections, cerebrovascular disease, neonatal preterm birth, congenital defects

Cerebrovascular disease, ischemic heart disease, COPD, Alzheimer’s disease, lower respiratory infection

Cerebrovascular disease, lower respiratory infection, ischemic heart disease, road injuries, tuberculosis

Deaths due to NCDs (%) (2016)














Sources. Taiwan data compiled from Directorate-General of Budget, Accounting and Statistics Executive Yuan, Republic of China, Statistical Yearbook of the Republic of China, September 2018, and The World Factbook (CIA), Urbanization. Hong Kong epidemiological data (excepting life expectancy) compiled from Government of Hong Kong Special Administrative Region, Department of Health Centre for Health Protection, Vital Statistics. Cause of death and NCD data (excepting Hong Kong) compiled from Institute of Health Metrics and Evaluation country profiles and GBD Results Tool. Remaining data compiled from World Bank World Development Indicators database.

As the economic and development statuses of these countries differ, so too do their diverse demographic and health profiles (Bloom, Lin, Ramesh, & Ikegami, 2013; Chongsuvivatwong et al., 2011; Phua, Sheikh, Tang, & Lin, 2015; Summerskill & Horton, 2011). The lower-income countries still have young and mostly rural populations with life expectancies of less than 70 years. They struggle with communicable diseases and high infant and maternal mortality rates. On the other hand, the high-income countries have rapidly aging populations, low fertility rates, and some of the world’s highest life expectancies. They face high burdens of noncommunicable and chronic diseases, much like other high-income countries in Europe. The remaining middle-income countries have demographic and epidemiological profiles that are in transition and increasingly moving toward those of the high-income countries.

This diversity implies that countries in the region will adopt different healthcare systems to advance toward UHC, and they face different challenges and opportunities. This article identifies three overarching types of systems: universal social health insurance, two-tiered systems common to former British colonies, and fragmented systems. Countries/territories adopting social health insurance include Japan, South Korea (Korea hereafter), Taiwan, China, Thailand, Vietnam, Indonesia, and the Philippines. Countries/territories adopting two-tiered systems include Malaysia and Hong Kong, and those that have fragmented systems with heavy reliance on out-of-pocket (OOP) spending and external funding include Cambodia, Myanmar, and Laos.

The following sections analyze each of the three groups’ healthcare systems as well as their performances and challenges in achieving UHC. The last section reflects on global lessons.

Universal Social Health Insurance

This article defines universal social health insurance as a system that pools multiple sources of funding—government subsidies as well as contributions from employers, employees, and households—to cover the entire population of a nation or territory. Within this broad category of social health insurance, three subtypes are identified: single-payer systems, noncontributory systems whereby the government heavily subsidizes poor and non-poor populations, and contributory systems.

Single-Payer System: Japan, South Korea, Taiwan

Japan, Korea, and Taiwan provide insurance coverage for their entire populations through national health insurance (NHI). Both Korea and Taiwan have a single-payer system in that they both (a) pool the health risk of the entire nation/territory into one risk pool, (b) cover everyone in the risk pool with one uniform benefit package of health services, and (c) have established one single purchaser that uses one uniform payment method for reimbursing providers and one set of rules regarding quality of care (Hsiao, Cheng, & Yip, 2016). Japan’s NHI is a single-pipe system in that it covers everyone with one uniform benefit package and purchases care from all providers using one uniform payment method and one set of rules; however, it has multiple risk pools.

All three systems are financed by employer and individual contributions as well as government revenues subsidizing the poor, near-poor, and other populations such as veterans, the elderly, and children. In 2000, Korea merged all of its existing health insurance societies, then operating under three social health insurance schemes, to form the NHI (Kwon, 2009). A separate Medicaid program for the poor covers about 3% to 5% of the population (Kwon, 2009; Kwon, Lee, & Kim, 2015). Taiwan established its NHI in 1995 by merging three existing public insurance schemes and expanding coverage to the 41% of the population that was uninsured. In Japan, though all individuals are covered, there are many risk pools. There are about 3,000 employee-based and community-based social insurance schemes; citizens must be enrolled in insurance either through their employer, a citizens’ insurance plan, or the Late Elders’ Health Insurance scheme if they are 75 or older (Ikegami et al., 2011; Sakamoto et al., 2018; see Table 2).

Table 2. Health System Characteristics of Japan, South Korea, and Taiwan



South Korea


Total health expenditure, % of GDP




% of population covered by NHI


100 (97% NHI; 3% Medical Aid)



Employer/employee contributions. Government subsidies for elderly, self-employed, and retirees

Formal sector employee: 50:50 employer/employee contribution at ~6% of salaries

Joint contribution from employers, the insured, and government. Government fully subsidizes the poor and veterans and partially subsidizes unemployed households, farmers, and fishermen and union members.

Informal sector: contribution based on income and property ownership

Self-employed: government partially subsidizes

Low-income: full government subsidy

Risk pooling

Many risk pools: >3,000 employee-based, community-based social insurance schemes, Late Elders’ Health Insurance Scheme

One risk pool through NHI scheme

One risk pool through NHI scheme

Benefit package

Single benefit package for all, regardless of scheme enrollment. Benefit package covers inpatient, outpatient, dental care, pharmaceuticals, and over 5,000 medical services.

Single benefit package. Covers inpatient, outpatient, pharmaceuticals, dental care, and medical care. Does cover some preventive care like twice-yearly check-ups and cancer screenings, but mainly concerns curative care.

Single comprehensive benefit package. Covers all medical services, from outpatient visits and hospitalization to Chinese medicine, pharmaceuticals, most dental and home nursing care from a visiting nurse.

Provider payment methods

FFS with some case-based payment under a global budget cap

Mainly FFS with DRGs for a select list of diseases without global budget cap

FFS with some case-based payment under a global budget cap

Public/private share of hospitals (or hospital admissions)

Mainly private providers ~80% with ~20% public

Mainly private providers ~94% with only ~6% public

Hospital admissions: 48% not-for-profit hospitals; 19% for-profit; 31% public. Outpatient visits: 70% private clinics; 8% public hospitals, 7% for-profit hospitals, 14% not-for-profit hospitals, 1% public clinics

NHI contracts with public and private

NHI contracts with public and private

NHI contracts with public and private

Primary care and gatekeeping

Primary care is usually delivered at private clinics. No gatekeeping.

Primary care is usually delivered at private clinics. No gatekeeping.

Primary care is usually delivered at private clinics. No gatekeeping.

In all three health systems, there is one identical benefit package. Taiwan and Japan provide relatively comprehensive services, including broad coverage for medical services, pharmaceuticals, and dental care (Cheng, 2003; Lu & Hsiao, 2003; see Table 2). By comparison, Korea’s benefit package is narrower, with a focus on curative care, such as emergency care, diagnosis and treatment, pharmaceuticals, and dental care (Kwon et al., 2015). The benefit package often does not cover very expensive services (Lee, 2015) or new, expensive technology (Kwon et al., 2015). Meanwhile, cost sharing is fairly high for covered services (Kwon et al., 2015). Inpatient care includes a 20% copay, while outpatient care is subject to a copay ranging from 30% to 60%. Discounts and exemptions exist for certain population groups, such as the poor, the elderly, and patients with a catastrophic illness. There are also limits, dependent on income, for OOP payments within a 6-month period (Kwon et al., 2015).

All three NHIs rely heavily on private provision. With public hospitals comprising only about 10% of hospitals in Korea, the private sector plays a prominent role in healthcare delivery (Kwon, 2009). In Taiwan, the majority (70%) of total outpatient visits in 2014 were delivered at private clinics (National Health Insurance Administration of Ministry of Health and Welfare of the Republic of China, 2014a), and only 31% of hospital admissions were at public hospitals (National Health Insurance Administration of Ministry of Health and Welfare of the Republic of China, 2014b). Most clinics and hospitals in Japan are privately owned, including over 80% of hospitals in 2016 (Sakamoto et al., 2018).

All three NHIs pay providers, whether public or private, predominantly by fee-for-service (FFS) according to a uniformly applied fee schedule. Both Taiwan and Japan impose a global budget cap for the whole sector. In Taiwan, providers bill in points according to the fee schedule, the total of which are divided into the total budget to derive a monetary conversion factor for each point. Each provider is then paid according to the number of points it billed in the period multiplied by the conversion factor (Yip, Lee, Tsai, & Chen, 2017). Japan revises its national fee schedule every 2 years to keep total expenditure growth within a predetermined rate set by the Cabinet. First, the Cabinet determines the global revision rate for all services and drugs included on the fee schedule. Within the global rate, the fee for each item is then revised to reflect past trends in volume growth, new technology, and targeted efficiency gains (Hashimoto et al., 2011; Ikegami, 2014). By contrast, Korea does not have a global budget cap (Han, Cho, & Chun, 2013). All services covered under the NHI are paid using FFS according to a set fee schedule; for services not covered, providers can set their own fees.

Performances and Challenges

Japan, Korea, and Taiwan have all achieved universal insurance coverage and provide relatively affordable and equitable access to all with reasonable financial risk protection (Lee, 2015; Reich & Shibuya, 2015; Wang & Yaung, 2013). The single-payer/pipe system ensures that everyone is covered by the same benefit package and that all providers are paid by the same method and same rates to prevent patient selection and cost-shifting from one payer to another based on payment method. However, Korea does not perform as well as Japan and Taiwan. Lee (2015) found that insurance contributions are regressive, in that the poor bear a larger financial burden relative to their financial means, since they are not totally exempt from financial contributions to the NHI. Additionally, the poor likely have more difficulty accessing uncovered services than the wealthy, who are more able to pay OOP (Lee, 2015).

Japan and Taiwan provide better financial protection than Korea. In Japan, OOP payments comprised 12.9% of total health expenditure in 2014, while they comprised 26% of total health expenditure in 2012 in Taiwan (World Bank, 2018; Yip et al., 2017). In comparison, OOP accounted for 36.8% of total health expenditures in 2015 in Korea (World Bank, 2018). In 2008, 2.0% of the population in Japan spent more than 25% of household income or consumption on OOP health expenditures, compared to 4.0% in Korea (Wagstaff et al., 2018). A 2007 study found that 0.87% of households in Taiwan spent 25% or more of total household expenditure on OOP payments, compared to 2.5% of households in Korea (van Doorslaer et al., 2007).

Korea’s shallower coverage of services contributes to its poorer financial risk protection: Korea’s NHI features incomplete coverage of costly inpatient procedures, exclusion of many services from the benefits package that must be paid for OOP, and high cost sharing (Goto, Hamashima, Mun, & Lee, 2015; Lee, 2015; van Doorslaer et al., 2007). Rapid expenditure growth also contributes to high OOP. While average annual growth rate in per capita health spending among OECD countries was 0.5% between 2009 and 2013, Korea’s growth rate was 5.4% over the same period (OECD, 2015). This results in part from the FFS payment system, which incentivizes providers to increase service volume and intensity. In addition, providers are incentivized to recommend services not covered in the NHI benefit package, especially new technologies, because fees for such services are not regulated (Kwon, 2009; OECD, 2012). One survey (Kwon, 2009) found that an average of 23% of total inpatient care medical expenses and 23% of total outpatient care medical expenses for hospitals were OOP payments for noncovered services.

A major challenge of all three NHIs is overutilization. In 2015, Japan and Korea reported 12.7 and 16.0 doctor consultations per person each year, respectively, compared to the OECD average of 6.9 annual consultations per person (OECD, 2017a). In Taiwan, the average yearly outpatient visit per person for Western medicine was 15.1 in 2015 (Hsiao et al., 2016). In Japan, the average number of specialist consultations was more than 13, double the average among OECD countries (Sasaki, Izawa, & Okada, 2015). The average length of stay in a hospital is 17.9 days in Japan and 16.5 days in Korea, both of which are more than double the average length of stay of 8 days among OECD countries (OECD, 2016; Sasaki et al., 2015). These results are partly driven by the FFS payment system, despite the use of global caps in controlling total health expenditure growth in Japan and Taiwan, as individual providers are incentivized to increase volume and intensity of service (Cheng, 2015).

Like most other advanced economies, the three systems face challenges presented by an aging population with an increased chronic disease burden, technological advancement, and increasing patient expectations.

In 2017, 27.0% and 13.9% of the populations of Japan and Korea, respectively, were 65 or older (World Bank, 2018). This is compared to 14.8% in Japan and 6.2% in Korea in 1996 (World Bank, 2018). While 7.5% of the population in Taiwan was 65 or older in 1995, 12.3% was 65 and older in 2015 (United Nations, Department of Economic and Social Affairs, Population Division, 2017). The United Nations has projected that, by 2050, people age 65 and older will comprise 36.4% of the population in Japan, 35.3% in Korea, and 34.5% in Taiwan (United Nations, Department of Economic and Social Affairs, Population Division, 2017). Han, Cho, and Chun (2013) estimated that 22.4% of health expenditure growth could be attributed to aging in Korea. In Taiwan in 2011, 34% of NHI spending was on the elderly (Cheng, 2015). Population aging is a substantial contributor to the rise in health expenditures in Japan (Tamakashi & Hamori, 2015). Nozaki, Kashiwase, and Saito (2014) estimated that two-thirds of the health spending increase from 1990 to 2011 was due to population aging.

The cost challenges due to aging populations are exacerbated by healthcare delivery systems in all three countries/territories that are hospital-centric and curative care based, with weak gatekeeping or care integration. This type of delivery system is expensive and not cost effective for managing and treating a population with an increasing burden of chronic health conditions and multiple comorbidities (Han et al., 2013; OECD, 2012; Reich & Shibuya, 2015).

Compounding these issues are the challenges all three health systems face due to technological advancement and patient expectations for new technology and drugs. In Japan, heavy use of expensive medical technologies and diagnostics, such as magnetic resonance imaging machines, has been contributing to rising costs (Reich & Shibuya, 2015). Korea faces similar pressures. Increasing demand for expensive medical technologies, which are often not covered by insurance, has been a key contributor to rising OOP costs (Kwon et al., 2015). Pharmaceuticals accounted for 22.5% of total health expenditure in Korea in 2017 and 19.7% in 2015 in Japan (OECD, 2018), while Taiwan’s drug expenditures were similarly high at 25.1% of total health expenditure in 2012 (Hsu & Lu, 2015).

To manage health expenditure growth and reduce unnecessary utilization, Japan, Korea, and Taiwan have introduced provider payment changes, but these changes have been slow and difficult to scale. In 2003, Japan introduced a case-mix payment system that combines FFS and case-based payment incentives, known as the Diagnosis Procedure Combination, for hospital inpatient care (Ikegami & Anderson, 2012). It accounts for roughly 55% of all inpatient admissions for acute care (Sakamoto et al., 2018). Korea piloted a voluntary diagnosis-related group-based (DRG) payment system for seven disease groups in 2002. Evaluations of the pilot program concluded that DRGs reduced length of stay by 5.7% and decreased costs by 14.0% (Kwon, 2003). It was not until 2013 that DRGs became mandatory for these seven principal diagnoses and expanded to all secondary and tertiary hospitals, excluding public hospitals (Jang et al., 2016; Kim, Han, Kim, Park, & Park, 2016). In 2010, Taiwan introduced DRGs, which accounted for roughly 23% of total NHI inpatient payment as of 2015, covering 401 diagnoses (Yip et al., 2017). Taiwan also introduced voluntary pay-for-performance for eight health conditions in 2001, though as of 2017, uptake of the payment scheme remained limited (Yip et al., 2017).

To control drug expenditures, Japan decreased its pharmaceutical drug prices through direct regulations that established maximum prices (Moreno-Serra, 2014). Korea separated pharmaceutical prescribing and dispensing nearly two decades ago. In 2006, it implemented a positive list system for drug reimbursement, whereby a drug’s reimbursement eligibility is based on both clinical effectiveness and economic factors (Bae et al., 2016; Kwon & Busse, 2016; Park et al., 2012). Taiwan has created a single fee schedule for pharmaceuticals where prices are set based on global price comparisons and reference pricing schemes that set price ceilings. In 2013, Taiwan established the Drug Expenditures Target, which triggers price adjustments when actual drug expenditures surpass the target (Yip et al., 2017).

To address population aging, Japan, Korea, and Taiwan introduced long-term care insurance in 2000, 2008, and 2016, respectively. Japan’s long-term care social insurance is financed by premium contributions for all at age 40 and above (45%), government subsidy (45%), and copayments (10%). Korea’s is financed by contributions from the entire population (60%–65%), government subsidy (20%), and copayments (15%–20%). Taiwan’s is primarily funded by government subsidy (90%), with 10% coming from copayments. The benefits package for the three schemes would cover a range of home and nursing care, community, and institutional care (World Bank, 2016).

However, all three systems still face major challenges in reforming their health services delivery systems. In Japan, the 2015 Health Care Reform Act required large hospitals with 500 or more beds to promote care coordination with community-based providers, which helps prevent hospital admissions and readmissions (Mossialos, Wenzl, Osborn, & Anderson, 2015; Toumi, Fukushima, Murata, & Onishi, 2016). In Taiwan, pilots such as the Family Physician Initiative, the Outpatient Integrated Care Initiative, the Capitation Payment Initiative, and the Post-Acute Care Initiative are being conducted to test new models of health service delivery (Yip et al., 2017). However, none of these initiatives has been evaluated yet.

Universal Social Health Insurance with Government Financing: China and Thailand

China and Thailand have established universal social health insurance systems. Unlike Korea, Taiwan, and Japan, China and Thailand do not have single-payer systems. In Thailand, formal-sector employees are covered by the Social Security Scheme. The Civil Servant Medical Benefit Scheme covers civil servants and their dependents. In 2002, the government extended insurance coverage to those not covered through these schemes, which constitutes 75% of the total population, through the Universal Coverage Scheme, financed by general tax revenue (Jongudomsuk et al., 2015, p. 55; Tangcharoensathien et al., 2015). In China, the Urban Employee Basic Medical Insurance covers formal-sector employees. The government later extended insurance coverage to the rural population through the New Rural Cooperative Medical Scheme and to the urban population not covered by the urban employee scheme through the Urban Resident Basic Medical Insurance scheme. Both the rural medical scheme and the urban resident scheme are heavily subsidized by the government, with moderate individual contributions (Yip et al., 2012). Neither China nor Thailand has integrated their multiple insurance schemes. Beginning in 2016, China started merging the rural medical scheme and the urban resident scheme, but the urban employee scheme remains separate. (See Table 3.)

Though China and Thailand both utilize multiple, unintegrated insurance schemes, the two countries differ in benefit packages. Thailand’s three insurance schemes offer comprehensive coverage, including inpatient and outpatient care. Both the universal coverage and the social security schemes include a small negative list for treatments of unconfirmed effectiveness or cosmetic procedures, whereas the civil servant scheme does not (Jongudomsuk et al., 2015; Tangcharoensathien et al., 2015). In China, the benefit package for the urban employee scheme is significantly more generous than those for the urban resident and rural medical schemes. In the initial phase, the urban resident and rural medical schemes covered only inpatient care, but they have now been extended to include outpatient services. Both schemes include cost-sharing mechanisms such as reimbursement limits and deductibles, and the extent to which these methods are used varies widely depending on regional economic conditions (Yip et al., 2012). The government has also introduced a separate catastrophic illness insurance for expensive health conditions that is financed by a fixed percentage of the existing social insurance schemes’ funds but is managed by private insurance companies (Liu, Vortherms, & Hong, 2017).

A fundamental difference in the Chinese and Thai social insurance schemes is the provider payment mechanisms they employ. Thailand’s three social insurance schemes each utilize different payment methods. The Social Security Scheme uses capitation payments that cover all the services included in the comprehensive benefit package. The Universal Coverage Scheme uses age-adjusted capitation for outpatient services and global budget with DRGs for inpatient care. For certain services or conditions, additional fee schedules exist (Tangcharoensathien et al., 2015). The civil servant scheme uses FFS for outpatient care and in 2007 introduced DRGs for inpatient care with a global budget cap. The primary payment method in China across its insurance schemes is FFS; other forms, including DRGs, capitation, and global budgets, are also being introduced, but most are only at the pilot stage.

In terms of service provision, both Thailand and China use a public-private mix to deliver hospital and primary care, although public provision dominates. China has essentially no gatekeeping requirements in its primary care system; patients can easily bypass primary care clinics to seek care at secondary- or tertiary-level hospitals. Gatekeeping functions vary by insurance scheme in Thailand. The Social Security Scheme imposes gatekeeping functions for both inpatient and outpatient referrals. The Universal Coverage Scheme only imposes gatekeeping for outpatient care, and the civil servant scheme requires no gatekeeping for both inpatient and outpatient care (Tangcharoensathien et al., 2015). (See Table 3.)

Table 3. Health System Characteristics of Thailand and China




Total health expenditure, % of GDP



% of population covered by insurance




Urban Employee Basic Medical Insurance (UEBMI): employer/employee contribution at 6/2% of wage.

Civil Servant Medical Benefit Scheme (CSMBS): general tax revenue with no contributions from individuals

Social Security Scheme (SSS): employer/employee contribution for a total of 4.5% of wage

Urban Resident Basic Medical Insurance (URBMI)/ New Cooperative Medical Scheme (NCMS): government subsidies approximately 60/85% of premium. Individuals pay the remaining 40/15%.

Universal Coverage Scheme (UCS): general tax revenue with no contributions from individuals

Risk pooling

UEBMI: city

Risk pools based on the three insurance schemes: CSMBS, SSS, and UCS

URBMI: city

NCMS: county

URBMI and NCMS merged into one scheme with risk pooling at city level, starting 2018/2019

Benefit package

UEBMI provides comprehensive coverage for inpatient and outpatient care. NCMS and URBMI offer more limited coverage, covering inpatient services and very limited outpatient services. Depth of coverage also differs across schemes. Local governments determine the benefits packages.

Benefit packages largely the same across CSMBS, SSS and UCS. All three cover inpatient and outpatient care, maternity care, essential drugs, dental, etc. SSS and UCS have short negative list of treatment proven ineffective and cosmetic surgeries. CSMBS does not have any exclusions.

Provider payment methods

Mainly FFS with some pilots on DRGs, global budgets, or capitation payments

CSMBS: FFS for outpatient; DRG for inpatient

SSS: capitation for outpatient and inpatient

UCS: capitation for outpatient; DRG with global cap for inpatient

Public/private share of provision

About 55% of hospitals are government owned but government hospitals make up 80% of total hospital admissions. No exact data for public/private mix for clinics or outpatient visits. All three schemes contract with government hospitals but contracting with private hospitals/clinics vary by scheme and location.

CSMBS: only cover public providers

SSS: public private mix

UCS: mainly public networks including district hospital and health centers

Primary care and gatekeeping

Primary care is delivered through a private-public mix as there are private village doctors and clinics while there are also public township and community hospitals that offer outpatient care.

Primary care is delivered through health centers in rural areas and private clinics in urban areas.

CSMBS: no gatekeeping

SSS: gatekeeping for both inpatient and outpatient

No or ineffective gatekeeping.

UCS: gatekeeping for outpatient

Performances and Challenges

Thailand has made impressive achievements in improving equitable access and financial risk protection with the introduction of the Universal Coverage Scheme. Existing evaluation studies found that access to both inpatient and outpatient care have increased, especially for the poor. Lower-income individuals also benefit proportionately more from government subsidies for the universal scheme. OOP spending was reduced by one third on average since the start of the universal scheme (Limwattananon et al., 2013). Catastrophic health expenditure was also reduced from 6% in 1996 to less than 3% in the first decade of the scheme (Tangcharoensathien et al., 2015). Services, however, remain inaccessible to those living in more remote regions (Jongudomsuk et al., 2015). This is largely due to the lack of quality services available in poorer and remote neighborhoods. Additionally, the health workforce is poorly distributed in Thailand, as rural remote areas fail to attract and retain qualified health workers (Ruangratanatrai, Lertmaharit, & Hanvoravongchai, 2015; Van Minh et al., 2014).

By contrast, while the expansion of insurance coverage in China has led to significant improvement in access to care (measured by utilization), the effect on financial risk protection has been limited (Hou, van de Poel, van Doorslaer, Yu, & Meng, 2014; Li et al., 2014; Meng et al., 2012). This is partly due to the low level of service coverage, especially in the early stages of the urban resident and rural medical schemes. However, more importantly, all three insurance schemes pay healthcare providers primarily by FFS, creating incentives to overtreat. This is compounded by China’s fee schedule, which is not set according to cost. Instead, fees for diagnostic tests are set above cost, whereas fees for consultations are set below cost. In addition, providers could charge a 15% markup on drugs. As a result, providers, from hospitals to primary care clinics, are incentivized to overprescribe tests and medicine, leading to rapid health expenditure growth (Yip, Hsiao, Meng, Chen, & Sun, 2010). Another source of high expenditure growth is the lack of gatekeeping function of lower-level health providers. Patients often seek care at higher-level and more expensive hospitals even for simple health problems (Marten et al., 2014; Yip & Hsiao, 2014; Yip et al., 2012).

With the goal of controlling health expenditure growth and improving financial risk protection, the Chinese government has instituted a series of major reforms since 2012. Broadly, there are three types of reforms to help control cost escalation. First, China introduced the zero markup drug policy, which removed the 15% markup from drug retail prices (Yi, Miller, Zhang, Li, & Rozelle, 2015; Yip & Hsiao, 2014). Studies show the policy reduced drug prescriptions and decreased drug expenditures per visit, but hospitals quickly found ways to recoup their lost revenues by increasing the number of admissions and expensive diagnostic tests and consumables (Fu, Li, & Yip, 2018; Liu et al., 2017; Yi et al., 2015).

Second, various forms of prospective payment methods, including capitation, DRGs, and pay-for-performance, were piloted in different provinces and counties across the country to reduce overutilization and correct misaligned provider behaviors encouraged by the previous FFS system. Overall, these pilots seem to have yielded positive results in reducing hospital expenditure and inappropriate service patterns, albeit gradually and at a small scale (Gao, Xu, & Liu, 2014; Jian et al., 2015; Sun et al., 2016; Yip et al., 2014). Finally, the Chinese government promoted pilots in building primary-care-based integrated delivery systems to establish gatekeeping and to reduce the use of expensive services at large hospitals for minor health conditions that can be treated at lower cost at the primary care level (McCollum et al., 2014; Yip & Hsiao, 2014).

Universal Social Health Insurance with Contributions: Indonesia, Philippines, Vietnam

Following the paths of most other countries in the east and southeast Asian region, Indonesia, Vietnam, and the Philippines have opted to adopt NHI to advance UHC. Their NHIs are financed by a combination of general tax revenue and individual contributions. Unlike China and Thailand, which use general tax revenue to cover those outside formal-sector employment, these three countries target government revenue for the poor, near-poor, and selected vulnerable populations; the rest of the population is required to contribute to enroll in a public health insurance scheme. As a result, covering the informal sector has been a major challenge.

In both Indonesia and Vietnam, a number of insurance schemes, covering different segments of the population, existed before they introduced their NHI programs. In 2014, the Indonesian government moved to unify its insurance schemes into a NHI (Jaminan Kesehatan Nasional) in order to expand coverage to the wider population, with a goal of covering everyone by 2019 (Mahendradhata et al., 2017). In 2009, the Vietnamese government implemented the Law on Health Insurance. This law merged the nation’s various insurance schemes,1 including the insurance scheme for the poor, into a single Social Health Insurance scheme (Somanathan, Dao, & Van Tien, 2013). The Philippines’s 1995 National Health Insurance Act established the National Health Insurance Program overseen by the newly created health insurance entity, PhilHealth (Romualdez et al., 2011, p. 38). All three NHIs are financed through general tax revenue and contributions from employees, employers and individuals (Mahendradhata et al., 2017; Ozaltin, Wilson, & Heymann, 2015a; Somanathan et al., 2013; Tandon et al., 2016). Table 4 provides more details.

In all three countries, the NHI schemes are designed to be a single-payer system with one benefit package and one risk pool that covers the entire population (Somanathan, Tandon, Dao, Hurt, & Fuenzalida-Puelma, 2014). Among the three nations, Indonesia offers the most comprehensive benefit package, covering most health services with minimal exclusions (Bredenkamp et al., 2015). Vietnam covers inpatient and outpatient services, including diagnostics, drugs, and rehabilitation care (Ozaltin et al., 2015a). In the Philippines, the benefit package was intended to be uniform and comprehensive. However, in practice, due to constraints in funding and supply, the benefit package is mainly limited to inpatient services. The poor and indigent populations are also entitled to a zero copayment for inpatient services and a limited package of outpatient/primary care targeted at Millennium Development Goals—related diseases. An expanded primary care benefit package is currently under pilot with the intention to be extended for all beneficiaries (Dayrit, Lagrada, Picazo, Pons, & Villaverde, 2018; Ozaltin, Wilson, & Heymann, 2015b).

Table 4. Health System Characteristics of Indonesia, the Philippines, and Vietnam





Total health expenditure % of GDP




% of population covered by insurance

75.88 (2018)

63.2 (2015)*

76.52 (2015)


Formal sector: employer/employee joint contribution

Formal sector: 50:50 employer/employee contribution of 2.5% of salary

Formal sector: 2/3:1/3 employer/employee contribution based on fixed % of salary

Informal sector/self-employed: flat rate based on income

Non-poor informal workers: flat-rate premium

Sponsored (second quintile income, elderly >60, orphans, disabled persons, out of school children, abused minors and women), and indigent (poor and near-poor) program: government full subsidies

Informal/self-employed: flat % of regional min. wage; with partial subsides

Poor, near-poor, ethnic minorities, elderly >80, children <6: full subsidies

Poor and near-poor: government subsidies

Risk pooling

Single risk pool under national health insurance (JKN)

Single risk pool under National Health Insurance

Single risk pool under Social Health Insurance

Benefit package

Single comprehensive benefit package including inpatient, outpatient, drugs.

Intention is to have a single benefit package. In reality, benefit package is limited to mainly inpatient care. For the poor and indigent members, benefit package covers some outpatient services.

Single benefit package. Covers inpatient and outpatient, diagnostics, drugs, and rehab. 20% copay applies. For tertiary care, there is a per-episode cap at USD35.

Provider payment methods

Capitation payment for primary care and DRGs for inpatient care

FFS for inpatient care, capitation for outpatient care for the poor, and some case-based payments for maternal care and a few communicable diseases

Capitation for district hospitals and FFS for secondary and tertiary hospitals

Public/private share of hospitals

Mainly public, with a growing number of private hospitals in the central islands of Java-Bali

Mixed, with ~60% private and 40% public

Public beds: 95%, private beds: 5%

Primary care and gatekeeping

Primary care is mainly delivered through public primary care facilities called puskesmas. In theory, patients must receive referrals from puskesmas to seek care at a hospital or specialty clinic

Primary care is delivered through a public-private mix with primary care centers, district hospitals, and private clinics.

Primary care is mainly delivered through community health stations, district hospitals, and a small share of private clinics.

No or ineffective gatekeeping

No or ineffective gatekeeping

*Percentage of households.

Performances and Challenges

After more than a decade of health insurance rollout, these countries are still struggling to cover their entire populations. As of October 2018, about 76% of the Indonesian population was enrolled in the NHI scheme (Agustina et al., 2019). In the Philippines, 63.2% of households had insurance coverage in 2015 (Bredenkamp et al., 2017).2 Health insurance enrollment rates have been rising in Vietnam, increasing from 64.8% in 2011 (Somanathan et al., 2014) to 77% in 2015 (Takashima, Wada, Tra, & Smith, 2017).

Extending coverage to informal-sector workers—who comprise 65.4% and 44.8% of the total population in Vietnam and the Philippines, respectively—through voluntary enrollment with contributions has been a major challenge. Even if enrollment with contributions is mandatory, because informal-sector workers normally do not have wage records, enrollment is voluntary by default. As a result, only individuals with high health risks select to enroll. China and Thailand circumvent this selection problem by using government general tax revenue to subsidize everyone who does not work in the formal sector.

Partly due to incomplete population coverage, OOP expenditures are still high in Indonesia, Vietnam, and the Philippines (see Figure 1). In 2015, OOP expenditures comprised roughly 48%, 54%, and 44% of total health expenditures in Indonesia, the Philippines, and Vietnam, respectively (World Bank, 2018). In 2015 in Indonesia, 0.4% of the population spent more than 25% of household income or consumption on OOP health expenditure, and 3.6% spent more than 10%. In the Philippines, 1.4% of the population spent more than 25% of household income or consumption on OOP health expenditure, and 6.63% spent more than 10% in 2015. In 2014, 2.1% of the population in Vietnam spent more than 25% of household income or consumption on OOP health expenditure, and 9.8% spent more than 10% (Wagstaff et al., 2018). These rates are considerably higher than those in Thailand, as reported in the previous section.

Figure 1: Composition of total health expenditures by financing sources, 2015

Notes: *Japan = 2014. **Taiwan = 2012. SHI % includes social health insurance schemes and other compulsory health insurance. Other % includes voluntary and private insurance schemes as well as other voluntary financing schemes, such as nonprofit institutions serving households.

Source: All data from WHO Global Health Expenditures Database, except for China, which is from the Chinese National Health Account, and Taiwan, which is from Yip, Lee, Tsai, & Chen, 2017.

Utilization of care continues to be low. In the Philippines, Picazo (2015) found that, in 2008, only 6.2% of PhilHealth members utilized their membership for inpatient hospitalization. In Indonesia, only 14% of the population used outpatient care, and only 2.5% of the population used inpatient care (Harimuti, Pambudi, Pigazzini, & Tandon, 2013). Though the reasons for low utilization are multifaceted, the main driver among the poor is likely supply-side constraints. A comprehensive list of services is often covered by the health insurance schemes on paper; however, many of these services are not available in actual health facilities, especially at the lower levels of the health system (Bredenkamp et al., 2015; Cabral, 2016). Drug stock outs and absenteeism are common problems at primary care centers in these countries, especially in rural and remote areas (Bredenkamp et al., 2015; Utomo, Sucahya, & Utami, 2011; Van Minh et al., 2014). Retention of qualified health workers in rural areas and public facilities is a common challenge for all three countries (Halili et al., 2017; Kanchanachitra et al., 2011; Meliala, Hort, & Trisnantoro, 2013; Reich et al., 2016).

To increase service availability and improve equitable supply distribution, all three countries have introduced a number of policies, which include subsidizing medical education for students from remote and less developed areas to increase deployment to remote areas (Mahendradhata et al., 2017), requiring mandatory service in rural areas following graduation from medical school, offering higher salaries and benefits to attract health workers to work in rural areas (Frehywot, Mullan, Payne, & Ross, 2010, p. 365; Vujicic, Alfano, Shengelia, & Witter, 2010, pp. 11–12), and recruiting students from areas with the greatest health needs and incentivizing them to return to serve in poorer and underserved areas (Halili et al., 2017; Ross et al., 2014).

Two-Tiered Systems: Hong Kong and Malaysia

Hong Kong and Malaysia have two-tiered health systems where the public sector is financed by general tax revenue and the private sector is financed primarily by OOP payments and limited private insurance. In 2015–2016, government general tax revenue made up almost half of total health expenditure in Hong Kong, with OOP spending, employer-based insurance, and voluntary private insurance making up 34.6%, 6.7%, and 8.1%, respectively (Food and Health Bureau, n.d.). In Malaysia, government general tax revenue constituted 53% of total health expenditure, followed by OOP spending (36%) and private insurance (8%) (World Health Organization [WHO], 2018). (See Figure 2.)

Figure 2: Composition of Hong Kong and Malaysia’s total health expenditures by financing sources, 2015

Source: Hong Kong data are from Hong Kong Financing Sources Data (; Malaysia data are from the WHO Global Health Expenditures Database.

In terms of service provision, the public sector dominates the hospital service market, while the private sector primarily consists of general and specialist outpatient clinics. In Hong Kong, the public sector provides 85% of total hospital admissions but only 20% of total outpatient visits. Similarly in Malaysia, the public sector provides 82% of total hospital admissions but only 35% of total outpatient visits (Jaafar et al., 2013).

Public health facilities receive a budget directly from the government to provide free or significantly subsidized services for all. Public facilities in Malaysia receive line-item budgets, which are based on historical budgets. In 1993, Hong Kong corporatized its public hospitals and changed its line-item budget to an output-based budget that is tied to the hospitals’ annual performance in predetermined goals and targets. For private services, except for the limited population with private insurance, patients pay full price at private-sector facilities. Typically, private providers set their own price with limited government regulation (Rannan-Eliya et al., 2016; Van Minh et al., 2014).

The healthcare systems in Hong Kong and Malaysia exemplify those typically found in former British colonies, such as India and Anglophone Africa. Quality of care in the public sector in those former British colonies is relatively poor due to underfunding and lack of incentives to motivate health professionals. What distinguishes Hong Kong and Malaysia is that technical quality of care in the public sector is quite high. However, they ration care by waiting time and choice of physicians, and facilities are often overcrowded (Kong et al., 2015; Rannan-Eliya et al., 2016; Sebastian et al., 2016; Shafie & Hassali, 2013). Consequently, perceived quality and patient satisfaction with care are higher in the private sector (Van Minh et al., 2014).

Performances and Challenges

In Hong Kong and Malaysia, access to care is universal regardless of the patient’s income status; patients are protected from major financial risks because of free or subsidized and good-quality public-sector services. Although OOP expenditure accounts for a significant share of total health expenditures in both healthcare systems, the occurrence of catastrophic expenditures has been low. For example, in Malaysia, only 0.2% of households experienced health spending that constituted more than 25% of total household consumption expenditure in 2009 (Rannan-Eliya et al., 2016). In Hong Kong, less than 1% of households spent more than 40% of their non-food household expenditure on healthcare payments in 2004–2005 (Wong & Tin, 2015).

However, Hong Kong and Malaysia both have a two-tiered system that is not equitable. Whether patients choose to receive healthcare in public versus private facilities is largely determined by ability to pay and differences in perceived quality between the two sectors. Because private care is expensive, those who go to the private sector tend to be wealthier. Those who cannot afford private care face long waiting lines, lack of choice of physicians, and potentially poorer personal care compared to the private sector.

Hong Kong and Malaysia also face budgetary pressures. Because services are free or highly subsidized and quality is good, public health facilities face increasing demand. Over time, this has placed continuous fiscal pressure on the governments to allocate larger shares of their budgets to healthcare. At present, the governments of Hong Kong and Malaysia spend about 17% and 10% of the total government budget on health, respectively. This financial pressure will likely increase as their populations age. The demand on the public sector also places significant strain on physicians working in the public sector. As a result, both governments face the constant challenge of public-sector brain drain. The most well-known physicians are attracted to the private sector, where they are often better compensated and less overworked (Kong et al., 2015; Ng, 2015; Sebastian et al., 2016).

Motivated by the need to relieve fiscal pressure and to decongest public health facilities, both Hong Kong and Malaysia have proposed reforms with the goal of providing financial risk protection schemes that would allow beneficiaries to afford care in the private sector. In 2009, the Malaysian government tried, unsuccessfully, to propose mandatory universal social health insurance—called “1 Care for 1 Malaysia”—that would include coverage of services in both the public and private sectors (Jaafar et al., 2013; Tumin, Kana, & Zaki, 2016). Hong Kong attempted to introduce mandatory universal social insurance in 1999, but again it failed. In 2018, the government announced a Voluntary Health Insurance Scheme for hospital care (Government of the Hong Kong Special Administrative Region, 2018). Beneficiaries could use this hospital insurance to pay for private services. To what extent this will be scaled up remains unclear.

While much of recent reform efforts have focused on financing, the most fundamental weakness of the healthcare systems in Hong Kong and Malaysia is their fragmented delivery systems. Both populations face increasing incidence of chronic conditions. An efficient healthcare delivery system should be built on strong primary healthcare, with effective health promotion and management, and with functional or effective coordination and integration with secondary and tertiary care. However, in both countries the public-private care mix, whereby hospital care is concentrated in the public sector and outpatient care in the private sector, has created major barriers in care coordination and integration. Because the private and public health systems are separately managed, integration of care across the two systems is lacking (Sebastian et al., 2016). In addition, the outpatient sector, which is dominated by for-profit private providers, primarily focuses on curative care. Thus, both Hong Kong and Malaysia suffer from weak primary healthcare.

Fragmented Systems: Cambodia, Laos, Myanmar

Laos, Myanmar, and Cambodia have only recently emerged from decades of civil conflicts and military regimes. Their healthcare systems are characterized by high OOP spending, low government investment in health, and reliance on external aid. Organized financing in the form of prepayment schemes is limited to civil servants and the formal employment sector (which typically make up an insignificant share of the total population) and small-scale community-based insurance schemes for some informal workers. As a result, their systems suffer from a high degree of fragmentation in financing. On the delivery side, all three countries have primarily public healthcare facilities, spanning from hospitals for tertiary and secondary care to health centers responsible for basic outpatient services and preventative care. In recent years, there is also a rapidly growing private sector, especially in urban areas, and many private facilities are staffed by physicians who also work in the public sector (Akkhavong et al., 2014; Annear et al., 2015; Sein et al., 2014). These countries are far from achieving UHC. They continue to struggle with the unmet Millennium Development Goals, which remain the nations’ principal priority.

Cambodia utilizes a combination of measures to finance healthcare, including user fees (introduced in 1996); vouchers for prenatal, delivery, and postnatal care (introduced in 2007); and donor-funded and government-funded health equity funds (introduced in 2000 and 2008, respectively; Ensor, Chhun, Kimsun, McPake, & Edoka, 2017). Health equity funds (HEFs) are a demand-side financing mechanism that fund medical fee exemptions as well as other common health access costs, such as transportation and food costs for the poor. HEFs are primarily managed by third-party nongovernmental organizations (NGOs) that identify the poor and then use donor funds to reimburse public health facilities for services used (Annear, 2010; Flores, Ir, Men, O’Donnell, & van Doorslaer, 2013). HEFs became Cambodia’s national strategy for supporting healthcare for the poor (Annear, 2010; Annear et al., 2015; Ir, Bigdeli, Meessen, & Van Damme, 2010) and are Cambodia’s largest social protection scheme by default (Annear, Ahmed, Ros, & Ir, 2013). Since the 1990s, Cambodia has also offered low-income families voluntary, low-cost Community Based Health Insurance. As of 2017, community insurance covered fewer than 10% of communes (Ensor et al., 2017). Cambodia has planned the National Social Security Fund for Civil Servants and National Social Security Fund for Private Employees, but these schemes are still in their nascent stages (Annear et al., 2015; OECD, 2017b).

Laos still depends heavily on OOP payments to finance healthcare (Alkenbrack & Lindelow, 2015; Bodhisane & Pongpanich, 2017; Masaki et al., 2017), supplemented by numerous relatively small insurance schemes. Introduced in 1995, the National Social Security Fund–State Authority for Social Security covers employees of the government and their families. In 2001, Laos established the National Social Security Fund–Social Security Organization to cover employees in the private, formal sector. Both schemes are mandatory for qualifying beneficiaries. Piloted in 2002 and extended in 2006, voluntary Community-Based Health Insurance is intended to cover informal-sector, non-poor workers. Laos also employs a noncontributory Health Equity Fund (established in 2004) for the poor, as well as the Free Maternal, Neonatal and Child Health program since 2010. Moving forward, Laos is aiming to reach the entire informal sector by merging community insurance, HEF, and the free maternal and children’s health programs into a single, noncontributory, tax-based NHI scheme. Launched in 2016, NHI was introduced to 15 provinces by 2017, with hopes of reaching all provinces in 2018 (Masaki et al., 2017). In 2017, 30% of the population had coverage through NHI, while 30% of the population had coverage through one of Laos’s other schemes. Forty percent of the population remained uninsured (Masaki, 2017).

Like Cambodia and Laos, Myanmar relies heavily on OOP payments to finance healthcare (Sein et al., 2014; World Bank, 2017). Myanmar has no comprehensive health insurance system. The Social Security System, founded in 1950, covers formal-sector employees, mainly in the private sector, and excludes their families; it covers less than 2% of the population (World Bank, 2017). Myanmar also does not have financial protection programs in place for the informal sector or the poor. The poor are technically exempt from user fees, and since 2012, maternal care, emergency care, and treatment for ill children is supposed to be free at all public hospitals, but implementation of these exemptions is far from ideal (World Bank, 2017).

Performances and Challenges

Cambodia, Laos, and Myanmar all continue to face high OOP spending, and thus they struggle to provide financial risk protections and affordable or equitable access to care for their populations. User fees are charged in the public health delivery systems in these countries, which creates access barriers, especially for the poor (Han et al., 2018; Tangcharoensathien et al., 2011). Fee exemption programs exist but are challenging to carry out in practice for various reasons (Tangcharoensathien et al., 2011; World Bank, 2017), including difficulty identifying the poor (Kwon, 2011) as well as low implementation capacity and weak enforcement mechanisms (World Bank, 2017). The poor thus often rely on donor-provided services and HEFs, or they seek care in the private sector and incur significant costs, or they simply forgo care (Akkhavong et al., 2014; Annear et al., 2015; Sein et al., 2014).

In Cambodia, household spending on healthcare as a percentage of household income increased from 2% to nearly 10% from 1997 to 2009 (Ensor et al., 2017). In 2009, 10.7% of the population spent over 10% of household income/consumption on OOP payments for healthcare (Wagstaff et al., 2018). Since 2009, most population groups, especially the poor, have experienced a decrease in both absolute health spending and the proportion of income spent on health (Ensor et al., 2017). Studies suggest that HEFs have improved healthcare access and reduced OOP payment. For example, one study (Flores et al., 2013) found that, on average, HEFs reduced health payments by 35% for households making any level of payment for healthcare; for poor households, there was a 42% decrease. However, in 2015, OOP payments remained high, at 59.4% of total health expenditures (WHO, 2018). Geographical and socioeconomic differences also remain. In a 2014 survey, of the 8.96% of households that noted incurring catastrophic health expenditures in the 30 days before the survey, 91.2% were in rural areas (OECD, 2017b). Though the portion of total consumption comprised of health spending declined for the poorest quintile from 2009 to 2011, it still exceeded the proportion of consumption spent on health by the richest quintile and the nation overall (Ensor et al., 2017).

A study of community insurance in Laos found that the insured had lower OOP payments, higher utilization, and lower occurrences of catastrophic expenditures; however, the poor benefitted less from the scheme in terms of enrollment and utilization/financial protection, and enrollment in the scheme remains very low (Alkenbrack & Lindelow, 2015). Since its implementation, only 3% to 5% of community insurance’s target population has actually been covered (Masaki et al., 2017). Though the percentage of total health expenditure comprised of OOP payments has declined, OOP payments are still a large part of health financing (Masaki et al., 2017). In 2012–2013, 4.6% of households spent 10% or more on health expenses, increasing from 3.7% in 2007–2008 (Masaki et al., 2017). In 2015, OOP payments accounted for 45% of total health expenditure (WHO, 2018).

In Myanmar, OOP payments comprised 74% of total health expenditure in 2015 (WHO, 2018). One study estimated that, in 2010, 14.6% of households in Myanmar experienced catastrophic health payments (Han et al., 2018).3

Equity in access to care is a challenge in all three countries, partly due to the lack of insurance coverage but also partly due to the lack of, and uneven distribution of, supply of health services. In Cambodia, access to care and equity in access have increased. For example, from 2004 to 2007, for the poorest quintile there was, on average, a 36% reduction in the distance between the closest health center and patients’ homes (Annear et al., 2015). However, socioeconomic and geographic inequities remain. Though doctors must spend their first few years of practice in rural areas, many choose to relocate to urban areas when their placement is over; as a result, Cambodia struggles to maintain an adequate skilled health workforce in rural areas (Annear et al., 2015). For women ages 15 to 49 in 2010, over 40% from the highest household incomes experienced financial barriers to accessing care when they were ill, compared to nearly 80% of women with the lowest incomes (OECD & WHO, 2016). One study (Dingle, Powell-Jackson, & Goodman, 2013) found considerable gains in overall access and equity from 2000 to 2010 for six maternal and reproductive health services; however, it also found that utilization was still greater for the wealthiest quintiles in 2010. For example, while skilled birth attendance use was 96.8% for the wealthiest quintile, it was 42.2% for the poorest quintile.

In Laos, higher skilled health workers as well as diagnostic and treatment equipment are primarily available in central and provincial hospitals, creating access barriers, especially for the poor in rural areas (Akkhavong et al., 2014). In Myanmar, socioeconomic, geographic, and ethnic inequality in access to care are significant issues (Han et al., 2018; Zaw, Htoo, Pham, & Eggleston, 2015). A recent study found regional differences in financial risk protection and service coverage, as well as lower access to care for the poorest quintiles (57.9% coverage compared to 84.5% coverage for the richest quintile based on a composite coverage index; Han et al., 2018).

With low public investment in health, public health facilities suffer from many human and infrastructure constraints, especially in rural areas (Bredenkamp et al., 2015). Primary health centers are in poor condition, with no steady supplies of water, electricity, medicines, or qualified workforce (Akkhavong et al., 2014; Annear et al., 2015; Sein et al., 2014). Similarly, health worker density and hospital bed density are low and cannot meet population health needs (Chhea, Warren, & Manderson, 2010; , Risso-Gill, McKee, Coker, Piot, & Legido-Quigley, 2014; Van Minh et al., 2014). Supply availability thus presents a significant challenge for access.

A major challenge to the health systems in Laos, Cambodia, and Myanmar is fragmentation and sustainability of health financing given their heavy reliance on external funding. In 2016, external financing made up 18.95%, 18.12%, and 5.93% of total health expenditure in Cambodia, Laos, and Myanmar, respectively (WHO, 2018). This reliance is partly due to the fiscal constraints faced by these countries and other competing demands at their stage of economic development. In 2015, the governments in Myanmar, Cambodia, and Laos spent only 4.9%, 6.1%, and 3.8%, respectively, of their total government spending on health (World Bank, 2018). Figure 3 compares these three countries’ government spending share on health with other countries in east and southeast Asia.

Figure 3: Government health expenditure as a share of total government expenditure, 2015

Note: Japan = 2014.

Source: All data from WHO Global Health Expenditures Database.

In Cambodia, because health coverage for the poor relies heavily on donor-financed health equity funds, the financial sustainability of this method of coverage, as well as the government’s ability to grow these programs using domestic funds, is questioned (Annear et al., 2013; Tangcharoensathien et al., 2011). Additionally, Cambodia has struggled to achieve donor alignment (Annear et al., 2015).

In Laos, donor funding has contributed to fragmented financing (Masaki et al., 2017), and the considerable variations in spending on health over time have been attributed to external financing (World Bank, 2012). Additionally, maternal and child health and communicable disease initiatives consume a vast share of development assistance for health, leaving fewer resources to address Laos’s emerging noncommunicable disease burden (Masaki et al., 2017). Laos’s health financing is in transition. Laos has been experiencing significant economic growth: it had an average annual GDP growth rate of 7.8% from 2005 to 2015, and it reached lower-middle income status in 2011 (Masaki et al., 2017). As a result of this growth and anticipation that by 2020 it will no longer have Least Developed Country standing, external funding is expected to decrease. Laos will therefore need to bolster its domestic financing capabilities (Masaki et al., 2017).

In Myanmar, over 65% of health-related official development assistance went to programs targeting Millennium Development Goal 6 (HIV/AIDS, malaria, tuberculosis; Risso-Gill et al., 2014; Saw et al., 2013). As of 2013, Myanmar did not have sustainable, long-term financing schemes in place to maintain the progress made toward achieving these goals. With no long-term system, external financing will continue to be necessary (Saw et al., 2013). Because much of Myanmar’s external aid has been given directly to NGOs and international organizations rather than the government, there have been concerns that donor funding will weaken the health system by resulting in fragmentation, lack of standardization, and the emergence of parallel systems (Sein et al., 2014).

Myanmar has taken steps to coordinate donor efforts in the country to support its healthcare funding and delivery by developing the Health System Strengthening Strategy with GAVI Alliance Partners in 2008 (Tin et al., 2010). One of the outcomes of the Health System Strengthening Strategy was the Coordinated Township Health Plan to allow better harmonization of priorities and goals among external partners working in Myanmar (Risso-Gill et al., 2014; Tin et al., 2010). In December 2016, the government released the five-year National Health Plan (2017–2021), which outlined goals of improving financial risk protection and providing the entire population with an essential health services package by 2021 (Han et al., 2018; World Bank, 2017).

Global Lessons and Conclusions

Asia is a diverse region. Even among the countries in the east and southeast Asian subregions on which this article focuses, the stages of economic development, demographics, and epidemiological profiles are very heterogeneous. Nonetheless, there is a convergence toward universal social health insurance as the main health system architecture. The attraction of universal social health insurance—which pools government subsidies and contributions from employers, employees, and individuals outside the formal employment sector into one scheme—is that it covers everyone in the nation/territory with an identical benefit package, which enhances equity in the system. However, whether countries can successfully implement universal social health insurance depends on a number of preconditions and, in particular, the stage of economic development of the country.

Regardless of whether a country finances its health system via general government tax revenue or contributions from households, employers, and employees, a country’s stage of economic development determines the amount of resources it has available for health system financing. Economic development is also associated with informality of the labor market: the more advanced an economy is, the higher the share of formal employment, which in turn determines the feasibility of contribution-based financing. Finally, economic development is associated with the degree of urbanization in a country. For lower-income countries where a significant portion of the population still resides in rural areas, there is greater need to ensure adequate supply of services in order to provide access to care.

The traditional forms of social health insurance, which rely primarily on contributions from employers and employees, are not feasible methods to reach wide coverage when a country has a large informal employment sector. These traditional forms of social health insurance typically collect premiums by direct payroll deductions. Without formal wage records, contributions from the informal sector are by default voluntary, even if they are mandated by design. Those who select to voluntarily enroll are likely to be those who are less healthy, leading to problems of adverse selection, which could threaten the financial sustainability of the program.

The experiences of Indonesia, Vietnam, and the Philippines show the difficulty in reaching universal insurance coverage via social health insurance when economies have a significant informal employment sector. As China and Thailand show, to achieve universal insurance coverage, governments must use general tax revenue to fully (or substantially) subsidize the populations outside the formal employment sector and beyond the poor and near-poor populations. However, to be feasible, this requires governments to rank health as a high priority for funding and have sufficient financial resources. Indonesia, Vietnam, and the Philippines are now considering raising additional tax revenue, such as through tobacco or other sin taxes, that is earmarked for subsidizing enrollment of non-poor informal workers.

Most of the countries that have adopted universal social health insurance have been able to improve access to care. However, whether access is equitable depends on how comprehensive the benefit package is and whether there is adequate supply of health services, especially in rural and remote areas. Even as Thailand and China have achieved universal insurance coverage, they differ in equity in access, as the respective benefit packages of China’s three insurance programs vary much more than the benefit packages in place for Thailand’s schemes. Both countries still struggle to ensure adequate supply in rural and remote areas, a challenge that is even more acute among lower-income peers such as Indonesia, Vietnam, and the Philippines.

The effects of universal social health insurance on financial risk protection vary by country. In particular, the provider payment methods that the insurance program adopts are critical. The lessons from Thailand’s Universal Coverage Scheme and China’s insurance programs illustrate this clearly. Thailand expanded insurance coverage to all through the Universal Coverage Scheme and adopted prospective payment methods, including capitation for outpatient services and DRGs with a global budget for inpatient services. By contrast, China continued to use FFS as the dominant payment method for its insurance programs. Compared to China, Thailand’s Universal Coverage Scheme achieved much better results in terms of controlling health expenditure and reducing incidence of catastrophic healthcare payments.

A critical question that every nation/territory that has adopted universal social health insurance confronts is how to ensure the financial sustainability of the program. The pressure increases as the country’s population ages and people’s expectations rise with increasing income and technological advancement. Japan, Taiwan, Korea, and even Thailand and China face continuous challenges to manage health expenditure growth so that their respective programs can continue to fund the benefit package that they have promised to the people. Taiwan and Japan have been relatively successful in managing total health expenditure growth because they are single-payer/pipe social health insurance systems. They both pay providers in their systems with a single payment method at the same payment rate so that providers cannot shift costs from one payer to another. By being single-payer/pipe systems, both Taiwan and Japan have also been able to exercise significant monopsony power over providers in negotiating prices and payment methods.

In addition, although Japan and Taiwan pay their providers primarily by FFS, they also establish an annual aggregate budget constraint based on premium revenue growth in order to manage health expenditure inflation rates and ensure the financial sustainability of their programs. By contrast, although Korea also has a single-payer system with a single payment method and payment rate, it has been comparatively less effective in controlling its health expenditure growth because of its use of FFS in paying providers without a total budget constraint. Similarly, in Thailand, while the Universal Coverage Scheme has performed well in terms of health expenditure control, the civil servant scheme, which continues to use FFS, has not. While no rigorous study exists, theories and anecdotal evidence suggest that hospitals cost shift to the civil servant scheme when faced with strong incentives to control cost from the Social Security and the Universal Coverage Schemes.

Among the more advanced economies in east and southeast Asia, Hong Kong and Malaysia are exceptions in their choice of healthcare systems. Hong Kong and Malaysia continue to be two-tiered systems. Such two-tiered systems are inequitable in terms of access and personal aspects of quality. However, both Hong Kong and Malaysia have been able to provide financial risk protection for their citizens. This is primarily due to the existence of a public delivery system that provides free or subsidized services and thus offers a safety net. To what extent the systems trade off between financial risk protection and equity in access and service quality remains to be analyzed. The most considerable challenge Hong Kong and Malaysia face is their fragmented delivery systems, in which public hospitals dominate inpatient services while the private sector dominates outpatient care. Such demarcation creates significant barriers to integrating and coordinating care between outpatient and inpatient settings. As the population ages and more people are affected by chronic conditions, primary-care-based integrated delivery systems are more cost effective in managing and treating these conditions.

Among the countries reviewed in this article, Laos, Cambodia, and Myanmar confront the greatest challenge to achieving UHC. A combination of low government investment in health, high OOP spending, and external aid financing has led to relatively fragmented financing systems that are inefficient. People in these countries still face barriers to accessing care and a high incidence of catastrophic health spending. These challenges are similar to those faced by countries in other regions of the world that have similar socioeconomic conditions and government capacity to fund and implement comprehensive health reforms.

This article attempts to summarize the dominant forms of health systems in east and southeast Asia and assess their performances and challenges in achieving UHC. The diversity in the region and subregions prevents drawing one common lesson across all countries included in the analysis. This article also does not include Singapore. Under the guiding principle that health is an individual responsibility, Singapore’s health system is organized around medical savings accounts, complemented by a risk-pooled fund that pays for catastrophic health expenses. It is the only country in the region that has adopted such a system, and thus its lessons are less generalizable to the rest of the region or the world. Despite the fact that UHC is concerned with access to effective and good quality healthcare, there is very little literature that analyzes how countries with different health system designs differ in terms of their performance in quality healthcare; therefore, this article is also short on assessment on this essential element of UHC. Future research should give priority to assessing how different health systems impact on quality and effectiveness of health services. Asia is a diverse region. There will not be one single pathway toward UHC that will fit all countries’ needs and conditions. The diversity, however, provides ample opportunities for the countries to experiment with different approaches to advance UHC that would provide valuable lessons for the rest of the world.


Excellent and able research assistance and editing by Elise Weir is gratefully acknowledged.

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  • 1. Vietnam introduced a mandatory insurance scheme in 1992 for pensioners, civil servants, formal sector employees, and social assistance recipients; the scheme expanded to additional groups, such as dependents of military officers, in 1998. In 2002, the government introduced the Health Care Fund for the Poor, and it implemented subsidized compulsory insurance for the poor in 2005.

  • 2. PhilHealth reports that 93% of the projected population in the Philippines was covered by the National Health Insurance Program in 2017.

  • 3. Defined as 40% of nonfood expenditure.