Frequently asked questions
Estimates
What should I do if I have different estimates for the same entity and the same year?
(See PG 10.13) It is best to make a preliminary assessment as to which estimate is more reliable. It is also a good idea, however, to keep all the estimates at hand, as the reconciliation stage which follows may reveal more about the relative strengths of the estimates.
What should the health accountant do when an entity is known to be a financing agent but no figure is available for that agent’s spending?
(See PG 10.14) At this point, not much can be done. The best course of action is to leave the financing agent in the list without any associated amount. In later steps there may be an opportunity to estimate a figure for the financing agent. (In one sense, this is just a special case of there being a number of possible values for the spending of financing agents.)
Should indirect expenditures for support and maintenance be included in NHA?
(See PG 10.16) It is easy to overlook indirect expenditures for support and maintenance, because it is not uncommon for support services necessary for the maintenance of core health programmes to be budgeted under and provided by other non-health departments. Typical examples include provision of building construction and maintenance services by public works departments, printing of hospital forms and stationery by government printing departments, and auditing services by the government auditor. To the extent that these are support services related to the direct production of health services they should be treated as inputs to the production of health services. Otherwise, problems will arise in comparing government and private spending or in comparing the country’s spending with that in other countries. While preparing the estimates, it may be advisable to keep each support agency as a separate financing agent, consolidating them in presentation tables.
Do we include insurance benefits or insurance premiums under NHA?
(See PG 10.18) Actually, both insurance benefits and insurance premiums are included in the accounts. The benefit figure is used to estimate total personal expenditure on health, and the premium figure (together with any subsidies) is used to calculate national health expenditure. The difference between premiums and benefits, which is called the net cost of health insurance, is classified among the administrative functions. If this figure is negative, a financing source in FS.2.4.2 (ICHA code) should be established to channel funds from retained earnings to current operations. However, entities cannot finance losses from retained earnings for long without becoming insolvent, so it is prudent to check for the existence of subsidies from government or from external sources as a form of revenue of insurance companies.
How can I estimate insurance benefit from premium data or vice-versa?
(See PG 10.20) In the case of there being only a benefit figure for insurance, the premium figure must be estimated. This can be done by finding or estimating what is called a “loss ratio”, which is the ratio of benefits to premiums, and dividing aggregate benefits by that ratio. Alternatively, an estimate of total administrative expenses (either in monetary units or as a percentage of benefits) could be added to total benefits. These estimates or figures can come from consultation with knowledgeable people, from experiences in countries similar in terms of the maturity of the insurance industry, or from some other type of process (such as the professional judgement of the NHA team). If all that is known is the premium figure, benefits must be estimated through the reverse of the process described.
How much is “a significant amount" of difference?
(See PG 11.08) Health accounting is as much an art as a science, so it is not really possible to give a specific answer to the question of how much is “a significant amount” of difference. The acceptable level of difference depends partly on the type of data being dealt with and partly on the size of the total estimate.
For example, when dealing with reliable audited expenditure data presented according to strict public accounting rules, one should be very suspicious of any differences and look for errors in data entry. On the other hand, when dealing with data that are known to be estimates, a more tolerant attitude can be adopted. For example, discrepancies of up to 50% could be accepted when dealing with estimates of traditional providers, subject to the following comment:
- Whatever the type of data, the other important aspect is the size of the estimate itself; For example, a 15% discrepancy in a cell accounting for half of total spending is more serious than a 100% discrepancy in a cell contributing only 3% of the total. As a rule of thumb, there is cause for concern if a discrepancy between two estimates amounts to 2% of the total figure for national health expenditure.
- As experience grows in dealing with data sources and in working with the health accounts, health accountants will also develop an intuitive sense of when a discrepancy is important.
Is household production of health care a part of NHA?
(See PG 12.22) Unpaid family care is not considered to be part of national health expenditure. Households and families provide a lot of inputs to health care, through their uncompensated time and effort. For example, family members take time to care for the sick at home or to stay with them in hospital. In keeping with the current practice in the system of national accounts, the value of such uncompensated activities and non-monetary inputs is not counted as health expenditure in NHA. These inputs may be very significant, as in the case of home-based care for people living with HIV/AIDS. The value of these activities can be estimated, but it is not part of the total used for comparison of health expenditure with other economic aggregates or for international comparison of health spending.
Which table should I start with: ‘Financing agents by Functions’ or ‘Providers by Functions’?
(See PG 13.06)Developing the distributional tables requires combining expenditure data on payers, providers, functions, and specific distribution-related characteristics of people using or receiving health goods and services. Two NHA statistical tables are important sources of information: those showing the financing agents by functions (FAxF, See Table 5.4 of the Producers’ guide) and the providers by functions (PxF, See Table 5.3 of the Producers’ guide). Which table –– FAxF or PxF –– is of greater policy relevance is a matter for local decision. In some countries, the policy emphasis is on where various services are provided; in such cases, the PxF table is useful. In others, the emphasis is on who pays for various services; here, the FAxF table is useful. Operationally, however, it is likely that one table cannot be populated without working on the other as well, and both may be needed for distributional analyses.
Experience in various countries suggests that preparing these tables is not a straightforward task. If the payment systems mostly pay by item of service (usually where social insurance is predominant), and if corresponding data are available, then direct estimation of the FAxF table may be feasible. More typically, however, public sector budgets are not allocated or reported by function. Rather, fixed amounts are allocated to providers (sometimes at the input level of budget, as for pharmaceuticals or salaries). In such settings, direct estimation of the FAxF table is only possible for part of the total expenditures – and even then for a relatively small part. If this is the case, then FAxP may be easier.
To populate the PxF and FAxF tables, the best course of action is probably the following sequence of steps:
• to break down as much as possible each financing agent’s payments by function;
• to estimate a table of providers by functions (PxF);
• to construct the financing agents by functions (FAxF) table by combining and reconciling the results of these two estimations.
What should be used at the municipal level to estimate health expenditures as a share of total municipal expenditures?
Health expenditures encompass those activities whose primary intent is to restore maintain and restore health (PG 3.02 and 3.03). Any and all of the health and health-related functions described in the SHA framework can be carried out or financed at municipal level and should be included. At the conceptual level one must decide which activities to include; the PG offers some guidance (see PG 3.06-3.11), but ultimately the decision falls upon the judgment of the health accounts team and their advisors.
The practical problem is that delivery and financing of health activities may be intermingled with non-health activities. Typically this is a problem common to all types of actors in the health system but especially troublesome at the municipal level. Specific advice is hard to give here, as the best solution varies according to the type of data and information available to the health accounts team. Typically some form of judgment is needed; in some cases, one may be able to use time and motion studies or other similar analysis (see PG 13.21-13.26), or the informed judgment of key staff familiar with the programmes in question.
The choice of denominator in the ratio of health expenditure as a share of total municipal expenditure depends upon what message is to be conveyed. A municipal equivalent to GDP is not necessarily meaningful even where it is available. One might try to develop regional GDP estimates using proxy or key measures such as wages to prorate national GDP, or use data from a household survey to develop regional shares of total national household consumption. However, these measures remain at best a crude approximation of regional/municipal domestic product.
However, if the analytic question is more focused there may be a better measure available. For example, if one wants to know how health rates as a municipal priority, one could construct a ratio of municipal public health expenditures to total municipal government revenues or expenditures, and compare the ratio across municipalities or against the national average. Similarly, one could compare household out-of-pocket spending to total household spending at the subnational level and compare this ratio across municipalities and against the national figure. In other words, by restricting the analysis to a particular group of actors one may be able to find a valid and reliable denominator that reflects the total resources available to those actors.
Mexico has done some interesting analysis looking at per capita expenditures on health by state, compared to an index of health status for each state. This analysis is useful for assessing health expenditures relative to need and was used by the Ministry of Health to guide transfers from the central level to various states.
Why estimate NHA every year if a decision maker doesn't need the information yearly; the information is as useful every 3 to 5 years?
The decision on how often to produce health accounts depends on country-specific factors. For example, some countries experience relatively rapid evolutions in health financing policies, and tracking those may be important. Other countries have more stable systems, in which case annual estimates may not be cost-effective.
Rather than focus on the frequency of the estimate reports, the key recommendation here is that the health accounts be an on-going process, as opposed to a start-and-stop process. By maintaining a level of effort, the health accounts team is better able to ensure consistency of definitions and approaches. When estimates are produced at intervals of several years, there is more likely to be loss of institutional memory as team members leave, and overall management of the process can be more complex compared to when data collection and compilation processes are routinized.
How to determine from payment on the "floating" debt, how much corresponds to health?
In theory, interest payments on floating debt held by financing sources should not be included in the health accounts. For example, interest payments on general government debt should be excluded from consideration.
However, debt incurred specifically for financing health care should be considered, and the interest paid on this debt should be attributed to health in proportion to the use of the principal to finance health care activities. For example, if the social security fund pays both pensions and health care expenses and has floating debt on which it pays interest, some of that interest should be counted as health expenditure. How this amount would be included depends upon which type of actor is involved:
In the case of market providers of care, there is no need to make an explicit estimate of the interest payments, as the market prices they charge and receive already measures the economic value of the health or health-related good or service they provide (that is, somewhere in HC.1 through HC.6 or HC.R.1 through HC.R.7).
In the case of non-market providers for whom the value of services is measured by the costs of resources they consume during the production process, any estimated interest payments would be included among these resource costs. Because of this, the interest payments appear in the value of the health or health-related goods or services provided.
In the case of financing agents, the value of interest payments would appear in HC.7. These costs should not be devolved to the types of services or goods financed, as the interest payments reflect the cost of doing business as a financing agent. As with providers of services and goods, an explicit accounting of interest payments is needed only if the value of the activity is being built up from the costs of the resources consumed.
In practice, determining the appropriate share of interest payments to be included in the health accounts may be difficult. Sources at the Ministry of Finance may be helpful when doing this for government entities; discussions with people familiar with the finances of nongovernment entities may be helpful in other cases. In the absence of any other information, the interest can be split between health and non-health functions in proportion to the value of services produced by function.
Why does my NHA show different figures for household spending than does the household survey?
There may be several answers to this question. First, the definition of what comprises household spending may differ between the household survey and the national health accounts. Often a household survey will try to measure all outlays by households for health care. Thus “household spending” in the survey most closely matches “household funds” (FS.2.2) in the financing sources dimension. But category FS2.2 includes payroll deductions for health care (FS.2.2xHF.1.2 or FS.2.2xHF.2.1) in addition to cash payments made by households. The cash payments include copayments and purchases of noninsured services (FS.2.2xHF.2.3) plus cash purchase of insurance premiums (FS.2.2xHF.2.1 or FS.2.2xHF.2.2). Thus, no single category from the health accounts exactly matches what is being called “household spending for health” in the household survey.
Another possible answer is that the household survey was not used for all of the pieces of household spending for health in the NHA. For example, social insurance premium figures may have been taken from the Insurance agencies, or other types of substitutions may have been made (See PG paras 10.13 and 11.32 for a discussion and example of this).
Finally, it is possible that the household survey includes types of spending that are outside the boundaries of the health accounts. Perhaps the survey includes an estimate of informal transportation costs and the NHA has been defined to exclude this type of expenditure.
How does one treat expenditures associated with “medical tourism”? Consider two situations:
1. An individual (Person X) from Country A is a resident in Country B. How should expenditures on health in Country B for this person be treated?
2. Person X from Country A goes to Country B for a medical procedure. How should expenditures in Country B for that person be treated?
In some countries medical tourism can be a major issue and hence Country B would like to count expenditures by foreigners (temporarily visiting their country) against their overall health expenditures. For example it has been suggested that in one of the countries in the MENA region total health expenditures excluding medical tourism was $800 million and medical tourism was estimated to be $600 million.
In situation 1, the health expenditures of Person X should be counted in the NHA of Country B because X is a resident in that country. This is a fairly easy situation to handle from a health accounts perspective.
Situation 2 requires more work from the health accountants. This case involves what is essentially a matter of export and import. Country B clearly produced the medical care but it is treated as an export to Country A. For Country A it is a clear case of imported health care, and should be included in Country A’s final consumption.
Thus, health accountants in Country B (the exporters) ought to make an estimate of the amount spent to treat Person X and deduct that amount from their NHA figure. Further, they should deduct that spending from the total payments by Country B financing agents (FAs) on behalf of Person X. For example, if X received free treatment at a municipal clinic, the value of that treatment should be deducted from the total expenditures made through the clinic. To preserve the total expenditure figure, Country B health accountants may wish to present an exhibit table or addendum table showing the value of medical tourism and known financing agents.
Health accountants in Country A (the importers) should include this expenditure in their health accounts. This would be done using the regular classification schedules for health functions and financing agents. The appropriate provider classification is HP.9 (rest of world), and any payments made by Country B financing agents would show as HF.3 (rest of world). The amounts expended would be expressed in currency units of Country A.
However, data limitations may preclude the treatment from being implemented – in either or both countries. Thus a default treatment of leaving the expenditure on person X in Country B's accounts is the result of "flawed" implementation rather than flawed concept. How much time and effort is spent to identify these expenditures depends upon the resources available to the health accounts team and upon the estimated magnitude of medical tourism (either from the perspective of importation or exportation).