Dear Editor,
Backing by strong political support of the government, Ministry of Health and Medical
Education (MoHME) launched a major and ambitious reform in Iran on May 5, 2014 entitled
“Health Transformation Plan (HTP)” to address the main challenges in the healthcare
system including high levels of out-of-pocket (OOP) payments, irrational medical tariffs,
and low quality healthcare services.
1,2
HTP aimed to address these issues through a number of strategies. These included increasing
government spending on health, extending health insurance coverage, increasing medical
tariffs, creating new hospitals in deprived regions and increasing hospital beds and
recruiting more physicians and health workers, such as nurses and midwifes, in remote
areas as well as repairing and renovating public hospitals and health facilities.
3,4
HTP intended to cover four domains including medical services, public health and primary
healthcare, medical education, and pharmaceutical products.
Aiming to implement HTP, the government injected more than 85 000 billion Iranian
Rials (US$3196 million or INT$ 10 316 million
[1]
) additional funds into the healthcare system. The additional funds were generated
by allocating 10% of targeted subsidies and 1% of value-added tax to the healthcare
system and by increasing (though not considerable) the share of healthcare budget
from governmental budget. In November 2014, as the third step of HTP, medical tariffs
increased on average by 120% in order to tackle informal payments and making medical
tariffs more realistic. As a result, the total health expenditure rose by 39% and
its share as % of gross domestic product rose from 6.1% in 2013 to 8.13% in 2016 (Table).
As shown in the Table, the shares of all financing sources have increased. For instance,
OOP net amount has grown from 9.9% in 2013 to 18% in 2015 and has decreased to 2.2%
in 2016. In contrast increase in the share of governmental health expenditures as
percent of total governmental budget resulted in substantial reduction of OOP as %
of total health expenditure, which peaked in the first year of HTP implementation
with 9% reduction and with a slight decline afterward (Figure). Although the proportion
of OOP has decreased, available evidence shows mixed results regarding the reduction
in the incidence of catastrophic health expenditure.
5-8
However, more rigorous research needed to explore the impact of HTP in this area.
Table
The Changes in Healthcare Expenditure During 2013-2016
2013
2014
2015
2016
THE (in billion IRR)
621 623
864 604
1 036 846
1 146 138
THE % of GDP
6.1
7.5
8.7
8.13
THE annual growth (%)
-
39
20
10
Annual growth (%)
Governmenta
58.8
85.8
9
12.4
SHI
41.7
69.9
39.2
20.9
OOP
9.9
14.7
18
2.2
Others
51.3
13.4
10.5
9.2
GHE % of government budgetb
11.4
16.2
21
19
Abbreviations: IRR, Iranian Rials; THE, total health expenditure; GDP, gross domestic
product; SHI, social health insurance; OOP, out-of-pocket; GHE, governmental health
expenditure.
a Government including Local, state and central Government based on National Health
Accounts classification.
b It is not equal to general government health expenditure (GGHE) % of general government
expenditure (GGE).
Source: National Health Accounts, MoHME.
Figure
Changes in the Share of Different Sources of Total Health Expenditure as a Result
of HTP. Abbreviations: HTP, Health Transformation Plan; OOP, out-of-pocket; Prvt HI:
private health insurances. Source: National Health Accounts, MoHME.
By allocating 5500 billion Iranian Rials (2014 US$207 million and INT$ 668 million)
to the Iran Health Insurance Organization (IHIO) by the government, free health insurance
coverage was provided for uninsured individuals, who were mainly self-employed individuals
living in urban areas. In 2014 nearly 11 million people were covered by IHIO and overall
population coverage raised from 83% to 92%. The increase in insurance coverage, expanding
the health insurance benefit package, and reduction in OOP, enhanced access to and
utilization of the healthcare services, and in turn, led to satisfaction among the
public.
8,9
For instance, in 2015 and for patients covered by IHIO alone, utilization of inpatient
services and average hospitalization costs increased by 6% and by more than 73% respectively.
10
The rapid increase in the provision and utilization of healthcare services might be
driven partly by unmet needs before the implementation of the HTP and partly because
of consumer moral hazard, due to reduction in co-insurance rates in public hospitals,
and providers’ induced demand, caused by increasing medial tariffs and open-ended
fee-for-service payments.
Rising expenditures put high financial pressure on the government and public health
insurance funds, including IHIO and social security organization, which led to long
(up to one year) delays in reimbursing the hospitals and medical centers across the
country. This situation put the government in a horrendous bind and made the MoHME
to appeal to severe spending-cuts policies. For instance, MoHME forced medical universities
to cut down their spending at least by 20% in 2018 compared to 2017.
10
Alongside or even before the implementation of HTP, some other reforms to improve
efficiency of healthcare system were required. These reforms included establishing
evidence-informed demand and supply-side policies such as extending the referral system
and family physician programme to urban areas and population segments other than rural
residents, moving forwards to prospective provider payment mechanisms (such as capitation,
diagnosis related groups, and pay for performance), applying clinical guidelines,
as well as revising the benefit packages by including the most cost-effective interventions.
Moreover, organizational reforms in public hospitals aim to balance between revenues
and expenses is a prerequisite
11-13
and HTP should try to affect structure and process of healthcare provision as well
as culture and values of healthcare organizations to avoid over use and provider’s
induced demand. HTP could have been used as a golden opportunity to implement the
structural reforms, some mentioned above, which has been emphasized in the national
development plans over the last decades.
The speed of policy reform process should also be taken into account. The new government
began officially on August 3, 2013 and in less than one year, on May 5, 2014, the
HTP as a major reform began, though with more focus on financing dimension of the
healthcare system. It would have been better for the MoHME to take a more conservative
approach and implement the HTP gradually or in some provinces as a pilot program first,
explore potential impacts and identify its implementation pitfalls, and then scale
it up at the national level after making necessary amendments in the plan. In launching
a large-scale health reform such as HTP, if necessary considerations for long-term
financial sustainability are not taken into account, the short-time achievements would
not last long, and in long run, it can have negative impacts on the performance of
healthcare system as a whole. However, with all its pitfalls and limitations, HTP
is a window of opportunity to pave the way towards universal health coverage and the
policy-makers should try to strengthen the plan, using the strategies mentioned above,
and do not let this opportunity pass.
Ethical issues
Not applicable.
Competing interests
Authors declare that they have no competing interests.
Authors’ contributions
LD and MB contributed to the conception of the work. LD drafted the letter. MB, BN,
and HHB provided critical comments on the draft. All authors approved the final version.
Authors’ affiliations
1Tabriz Health Services Management Research Center, Iranian Center of Excellence in
Health Management, Tabriz University of Medical Sciences, Tabriz, Iran. 2Social Determinants
of Health Research Center, Health Management and Safety Promotion Research Institute,
Tabriz University of Medical Sciences, Tabriz, Iran. 3Department of Health Services
Management, School of Management and Medical Informatics, Tabriz University of Medical
Sciences, Tabriz, Iran. 4Department of Public Health, Faculty of Health, Ilam University
of Medical Sciences, Ilam, Iran. 5Tabriz Health Services Management Research Center,
Tabriz University of Medical Sciences, Tabriz, Iran. 6Department of Health Economics,
School of Management and Medical Informatics, Tabriz University of Medical Sciences,
Tabriz, Iran. 7Institute for Global Heath, University College London, London, UK.
Endnote
[1] One dollar in US and International exchange rate (purchasing power parity) was
equal to 26 594 and 8239 Iranian Rial in 2014, respectively (Source: International
Monitory Fund, 2016).