We categorized the finding in four main themes: revenue raising, purchasing and resource allocation, payment mechanism and the pooling management. The details are presented below:
Raising revenue plays an important role in developing a program or designing a reform in the health sector. To implement the reform, two sources including Value Added Tax (VAT) and subsidy targeting revenue were added to the current financing sources of the health system. After starting the reform, some concerns were raised in continuing this big reform.
“The main revenues for HTP are the revenue which releases from subsidy targeting plan (10% of total revenue) and 1 of 9 percent value-added tax”[Senior insurance policy maker].
“It seemed the revenue from these sources is sufficient for running the plan. After one year of the beginning of the plan, it was encountered with some problems, and challenges and animadversions were started”[Senior health official].
According to the participants, one of the main criticisms was the unsustainability of funding sources, as well as the lack of appropriate projection of the financial burden of HTP specifically on the other counterparts and beneficiaries like health insurance organizations.
“Revenues had been predicted just for first steps and first years of HTP, and in the second and third steps, health insurance organizations were affected because of not raising insurance revenues. This led to an imbalance in revenue and expenditure and budget deficit and also delays in reimbursement of invoices of health care providers, which sometimes reaches one year”[Member of Parliament].
Therefore, it has affected the funding and liquidity cycle in the health system, and most stakeholders including health care providers, pharmaceutical companies (both manufacturers and distributors), and contractor companies which had a contract with Medical Sciences Universities (MSU) and hospitals.
Another reason for unpredictability of financing resources is dependence on public revenues funding (e.g., public taxes and other sources of income), which is not earmarked and its allocation path and spending are not specified from the beginning. In these cases, existence of unpredictable circumstances can change the direction of credits and then allocate to new requirements. It is also likely that resource allocation may not be expanded where it has been allocated by the legislature, or related revenue is not realized.
According to the participants, in this period, challenges of the economic situation of the country, increasing national donor flows, and moving to establish health charity institutions to absorb some revenues is necessary. Taxes on fossil fuels, as well as harmful products such as tobacco, are one such option mentioned by some interviewees in order to increases revenues. Participants believed that it increase the resources governments to spend on HTP and overall population’s health.
- Health services purchasing and resource allocation:
Public resources are allocated by the PBO in Iran. This organization is responsible for governmental financial resource management. In the budget execution, BPO takes some considerations, which lead to delay in budget allocation. Delays in the financing cycle are divided into two sections, predictable and unpredictable. A part of the delays is entirely predictable and even becoming accustomed to the funding and allocation of resources.
“We are waiting every year for such delays. With Implementing HTP we hoped to receive reimbursements in appropriate times. But unfortunately, especially in the two last year, we deal with this problem in our hospitals” [Hospital manager].
According to the participants, unpredictable delays are mainly due to the lack of funds through the lack of realization of revenue sources and also lack of realization of projected headings for collection of revenues at a macro level. For example, according to Iranian economic situation, one of the main sources of funding is oil revenues, which are usually unstable and affected by several unpredictable factors such as economic sanctions, national and international political conditions, and unexpected events in some parts of the world, and existence of conflicts and civil wars in oil-producing regions.
All of the HTP money and most of the fund was allocated by PBO to IHIO. Public service providers are usually funded through health insurance funds. Therefore, any delays in reimbursing the public service providers’ reimbursements can make it difficult to provide a service in this sector. As a solution, the parliament approved to transfer IHIO from the Ministry of Cooperatives, Labor, and Social Welfare to MoHME. Some experts stated that this policy was pursued by MoHME, which aimed to be responsible for HTP funding source. While after 18 months of that approval, it showed that this policy could not resolve, alleviate, or overcome HTP funding challenges.
“We found that all HTP resources depend on Budgetary and Planning Organization Decision. Whenever this organization does not allocate necessary resources to MoHME, the interventions such as transferring insurance organization under the supervision of MoHME will not solve the current financial challenges”[ Senior provincial health manager].
According to the participants, it is also likely that resource allocation may not be expended appropriately where it has been allocated by the legislature, or related revenue is not realized. It can be noted that 10% of the total net of implementation of targeted subsidies law and also 1% of the VAT, which was supposed to allocate to the health system, unfortunately, it was not realized except in the beginning implementation phase of HTP.
“It is expected that the situation is gradually returning to the situation before the HTP implementation. Because of financial challenges and not the appropriate allocation of financial resources to this plan, a former minister of health resigned and quit governments’ body”[Health planner].
The HTP spent more money on health, and despite highest spending, did not reach measures of health system performance in critical areas of quality, efficiency, access to care, and equity. MoHME did not efficiently use resources in way and, inefficiencies account for a major source wasted.
“Despite the achievements of the Health Transformation Plan, lack of consistency and a sound economic logic hindered the realization of the ultimate goals of the plan and, over time, some of its positive outcomes, gained by expensing of huge resources, have started to regress, which requires further review”[Health researcher].
- Provider payment mechanism:
Recently, the fee for services became a widespread mechanism through implementing the pay for performance method and updating the Relative Value Units (RVUs). This resulted in two main challenges: fast-rising in health system expenditure and inequity in payments. In spite of enhancement of payments and creating relative satisfaction, some groups of health practitioners and employees like nurses and some medical specialists are dissatisfied. They claim that these changes in payment are unfair and enlarged the gap into medical specialist and between the medical specialist and other employee and health care providers.
“Creating reform in the payment system, which is full of structural conflicts of interest is not an easy feat. The Health Transformation Plan is like a train that doesn’t stop in any station, but we must attempt to make costs more reasonable. Payments should be reasonable based on actual prices of health care services. Reform in the payment system is not possible without a critique of the past”[MoHME advisor].
Resources are limited, and government has the limit fiscal space to govern and administrates many obligations, function, and sectors. When financing policymakers allocate the revenue to health, it means a reduction in the share of other areas, including agriculture, education, social affairs, and others. Under such circumstances, pressure from different areas on the national resources planning board intensifies. This is very critical and sensible when the GDP growth is little or negative; the share of the Total Health Expenditure (THE) as a percent of GDP goes up. The more the gap between growth in health expenditure and economic growth, the greater will be the pressure on the government for healthcare financing.
Some participants believed that Iran’s health financing is fragmented, and HTP intensified this fragmentation. They implied that financial resources of HTP should be collected and pooled in the health insurance organization. The health insurance organization is responsible for the management of health financial resources and services purchasing. MoHME needs to care more about the prescribing and utilization of services.
“Resource management should be done by insurance organizations and not by MoHME. The role of MoHME is supervision and stewardship and not collecting or pooling of the financial resources”[Senior health insurance director].
Participants mentioned that lack of an accurate and transparent process for financing the long-term plans of government and also deviation in the HTP are the main reasons for the disagreement between the MoHME and PBO in pooling of resources. They also suggested that health system policymakers are required to consider the revenue growth depends on not only the rate and base of the tax but also on the priority setting of total country objectives. Whether a country willing to give up other purposes to increase health sector funds. Therefore, it seems that educating some fundamental principles about resource allocation and pooling is necessary for Iran health policy makers