Social health protection

Expansion of Lao People's Democratic Republic’s National Health Insurance accelerates progress towards universal health coverage

Since 2016, Lao People's Democratic Republic’s landmark National Health Insurance Scheme has been progressively scaled up, streamlined and consolidated to deliver on the country’s goal to achieve universal health coverage by 2025.

Feature | 04 February 2020
The Government of the Lao People’s Democratic Republic is working towards the ambitious goal of achieving Universal Health Coverage (UHC) by 2025, through the progressive expansion of its National Health Insurance (NHI) scheme.

UHC means that every community, regardless of income, gender, ethnicity or age, is able to access the healthcare they need without facing financial hardship.

For Lao People's Democratic Republic, achieving this goal is an ambitious undertaking. As one of the poorest countries in South East Asia, the country has some of the lowest health indicators in the region and prevalent social protection gaps, leaving many households vulnerable to the impacts of ill health and accidents. This is exacerbated by widespread informality, which characterizes 80 percent of the workforce in the country.

However, despite the scale of the challenge, Lao People's Democratic Republic’s social health protection landscape has undergone dramatic changes over the past two decades and great strides have been made over the years.

In 1997, the country introduced user fees for public health facilities, which naturally gave rise to an increase in out of pocket health- care expenditure, excluding many from access to treatment. Globally, 100 million people are pushed into extreme poverty every year due to payments for health services. It is time to ensure that no one has to pay out-of-pocket to get the care they need.

In an attempt to address this, the Government of Lao People's Democratic Republic initiated various social health protection schemes. These included compulsory contributory schemes covering employees in private and public enterprises; a voluntary contributory scheme for informal workers and a social assistance scheme for poor households and recipients of maternal and child health treatment.

Despite the implementation of multiple health protection schemes, by 2015, less than 30 per cent of the population was covered. This has been attributed to low enforcement of the mandatory schemes, limited uptake of the voluntary system and the restricted geographical scope of the social assistance program. In addition, a lack of synergy between co-existing schemes resulted in implementation challenges.

In recognition of the poor outcomes of this fragmented system, strong political will for reform within Lao People's Democratic Republic’s health protection landscape mounted. This momentum resulted in the development of the National Health Insurance (NHI) scheme in 2016, which is administered by the National Health Insurance Bureau (NHIB) under the Ministry of Health.

NHI is a key component of the country’s strategy to achieve UHC by 2025 and reflects the Government’s commitment to the Sustainable Development agenda. As recognized by target 8 under Sustainable Development Goal 3 on healthier lives, a strong financial health protection system is instrumental to fostering more inclusive and sustainable development.

Outcomes of NHI so far signal a promising step in the right direction. Thanks to increased Government subsidies for the NHI, which were introduced in 2018, in under 10 years, the percentage of the Lao population covered by a social health protection scheme rose from 10.5 per cent to 94.3 per cent. In 2018, almost full population coverage was reached through various Government health insurance schemes combined. This has led to significantly improved access to health care for previously uninsured sections of society, including the many in informal employment.

In 2019, in line with decree 470 on National Health Insurance, the Ministry of Health initiated a merger of the pre-existing formal sector schemes with NHI, following a successful pilot in Vientiane and Sekong provinces. The aim of the merger is to harmonize social health protection administration under one unified system. In addition to improving efficiency and gradually enhancing quality of care, consolidating existing health insurance schemes is expected to strengthen equity in access to health care. This will ensure the development of a just health protection system that delivers treatment according to need, rather than the ability to pay.

The NHI scheme now relies predominantly on tax-based financing, which is combined with contributions from workers in formal employment. This ensures that those without the means to contribute are not excluded from accessing treatment.

To access care under NHI, patients pay a low co-payment at facility level ranging from 5,000 to 30,000 LAK (roughly 50 cents to US$3), depending on their treatment needs. In line with a national policy adopted in 2012, expectant mothers and children under 5 years old are exempt from these payments. In addition, poor patients are exempt, as well as formal workers contributing to the scheme.

To support the process of scaling up NHI, tackle implementation challenges and address gaps in coverage, the International Labour Organization (ILO) is working alongside Lao People's Democratic Republic’s Ministry of Health through the Grand Duchy of Luxembourg funded project, ‘Support to the Extension of Social Health Protection in South East Asia’. The project’s activities in Lao People's Democratic Republic build on good practices and lessons learned from a previous Luxembourg funded ILO project, which supported the development of NHI. The overall goal of the current project’s activities in this area is to build the institutional capacity of Lao People's Democratic Republic’s health protection system to ensure efficient, transparent, sustainable and gender responsive implementation of the NHI scheme.

To deliver on this goal, the project has assisted Lao People's Democratic Republic in designing the recently unified scheme and assessing the operation of the pilot merger in Vientiane and Sekong. It has also supported the central NHIB in strengthening the capacity of provincial and district NHI teams implementing the merger, to ensure that all NHI beneficiaries can access their rights to health care services.

To underpin these efforts, the project has been supporting evidence based policy reforms. For example, through implementing a costing exercise, the project has guided policy decisions regarding the inclusion of services in the NHI benefit package. More broadly, ILO has aided the Government in budgeting and planning for healthcare provision.

Extending the benefits of the unified NHI scheme to the entire population requires strong multistakeholder collaboration and a high level of political will for reform. With the support of ILO and other development partners in the region, the Government is taking steps to adapt policies and guidelines in alignment with the integrated scheme, scale up financial management, support data collection and develop an effective monitoring system.

Thanks to these ongoing reforms and interventions, Lao People's Democratic Republic’s journey towards UHC is picking up pace. On the horizon is an efficient, comprehensive and non-discriminatory health protection system that protects all Lao People's Democratic Republic citizens from health-related financial hardship.