HEALTH FINANCING PROFILE - COSTA RICA 88347 Costa Rica is among the top performers in health outcomes in the Latin America region with life expec- tancy, fertility rates and infant mortality rates comparable to higher income OECD nations.1 Significant historical investment in clean water and sanitation (97% of Costa Rican households have potable water piped in2 and 95% have what is considered the highest level of sanitation facilities3) together with fairly comprehensive primary health care coverage has contributed greatly to these positive health outcomes. Costa Rica is well on the way to meeting the Millenium Development Goals (MDGs) for child and maternal mortality after having seen infant mortality drop from 14 per 1,000 live births in 1995 to 9 in 2011. The maternal mortality ratio is among the lowest in the Latin America and Caribbean (LAC) region at 40 per 100,000 live births (2010) decreasing at 1.7% annually from 2000-2010 while over 95% of births are attended by skilled personnel.4 Costa Rica’s HIV/AIDS prevalence remains below 1% in the general population and it exhibits one of the lowest prevalence levels of tuberculosis for the region at approximately 15 per 100,000 population in 2011.5 These positive advances, however, have been accompanied by challenges familiar to OECD nations, namely issues of equity, financial sustainability and the increasing prominence of costly chronic illness- es relative to infectious disease. Health Finance Snapshot Total Health Expenditures (THE) have increased steadily as the covered population has expanded and the demographic and epidemiological transitions have advanced. General Government expenditure on health (GGHE) as a share of THE decreased by close to 7 percentage points from 1995 through 2011 (from 76.5% to 70.1% of THE) with Private Expenditure on health (PvtHE) increasing proportionally (Table 1, Figure 1). Table 1. Health Finance Indicators: Costa Rica 1995 2000 2003 2005 2007 2009 2011 Population (thousands) 3,469 3,919 4,133 4,245 4,200 4,591 4,727 Total health expenditure (THE, in million current US$) 763 1,129 1,418 1,545 2,202 3,032 4,457 THE as % of GDP 7 7 8 8 8 10 11 THE per capita at exchange rate 220 288 343 364 524 660 943 General government expenditure on health (GGHE) as % of THE 76.5 78.6 75.3 70.6 67.3 68.1 70.1 Out of pocket expenditure as % of THE 20.6 18.8 22.2 24.8 28.7 28.8 27.2 Private insurance as % of THE 0.6 0.5 0.8 2.7 2.4 1.9 1.5 Source: WHO, Global Health Expenditure Database; National Health Accounts, Costa Rica 4 Out of pocket spending (OOPS) makes up a significant portion of Figure 1. THE per capita by type of expenditure, THE (Table 1, Figure 1) and is used for6: Costa Rica. • purchase of medications; • medical consultations; Total expenditure on health per capita • lab examinations. • OOPS does not include insurance premiums or payroll deductions for public health insurance. (at exchange rate) 4 Though usage of private insurance remains low, it is increasing • Private insurance does not substitute public coverage. • It allows its beneficiaries to avoid queues for basic services by attending private providers. • Most privately insured individuals then return to public providers (and insurance) for inpatient and costly services. 4 External resources spent on health remain below 1% of THE. Note: Private insurance expenditure on health was below 1% before 2005. Source: WHO, Global Health Expenditure Database; National Health Accounts, Costa Rica Health Status and the Figure 2. Demographic Indicators: Costa Rica Demographic Transition Adults and the elderly typically utilize a great- er number of costly health services. An aging population that is accompanied by a decrease in the young, healthy working-age population has long-lasting impacts on health finance and sustain- ability. A. Birth and mortality rates are declining steadily (figure 2). B. Life expectancy is increasing. C. The total fertility rate (TFR) fell from 3.1 in 1990 to 1.9 in 2012. D. The ‘bulge’ in the population pyramid is moving markedly upward (figure 3). Source: Interagency Estimates (WHO, World Bank and UNICEF) and the Instituto Nacional de Estadistica y Censos, Costa Rica. This demographic transition goes hand-in-hand with the epidemiological transition Table 2. International Comparisons, health indicators. E. Non-communicable (chronic) illnesses have Upper Middle eclipsed infectious diseases as major killers Costa Income Country % Difference (Figures 4 and 5). Rica Average GNI per capita (year 2000 US$) 3,749.9 1,899.0 97.5% Figure 4. Mortality by Cause, 2008. Prenatal service coverage 89.9 93.8 -4.1% Costa Rica. Contraceptive coverage 80 80.5 -0.7% Skilled birth coverage 99.3 98.0 1.3% Sanitation 95 73 30.1% TB Success 54 86 -37.2% Infant Mortality Rate 8.7 16.5 -47.3% <5 Mortality Rate 10.1 19.6 -48.6% Maternal Mortality Rate 40.0 53.2 -24.9% Life expectancy 79.2 72.8 23.4% THE % of GDP 10.9 6.1 79% GHE as % of THE 53.7 54.3 -1.1% Physician Density 1.3 1.7 -21.9% Hospital Bed Density 1.2 3.7 -67.3% Source: WHO, Global Burden of Disease Death Estimates (2011) Source: Torres, Fernando Montenegro. “Costa Rica Universal Coverage Challenges and Opportunities Policy Note”, World Bank, 2012. Figure 5. Non-Communicable Disease Mortality, 2008. Figure 3. Population Pyramids of Costa Rica Source: Population Division of the Department of Economic and Social Affairs of the United Nations Source: WHO, Global Burden of Disease Death Estimates (2011) Secretariat, World Population Prospects: The 2010 Revision. Health System Financing and Coverage Costa Rica’s Social Security Fund (Caja Costarricense de Segu- and life insurance components. CCSS has achieved near-uni- ridad Social, CCCS) was introduced in 1941 and has gradually versal health coverage which is credited for Costa Rica’s overall evolved to cover increasing numbers of Costa Ricans (Figure 6). population health while also being strained by persistent and It includes not only health coverage but also disability, old age emerging challenges to safeguarding equity and sustainability. Figure 6. Timeline of Costa Rica’s Health Insurance Scheme Mandatory health insurance intro- duced with establishment of the Consolidation of health insurance cov- CCSS. The scheme initially covered erage for the uninsured. Entire primary only sickness and maternity care for health care network was transferred low-income workers living in the capi- from the Ministry of Health (MoH) to tal and some large provincial cities the CCSS 1941 1961 1990s 1990s Congress established universal Fiscal and administrative decen- health insurance for workers tralization to 3 networks with and their families. their own catchment areas (North- west, East and South). The CCSS is a single purchaser, vertically-integrated public body. It administers the following social security regimes which include a health insurance component (SEM)6: A. Salaried (conventional employer-employee relationship with both contributing premiums through automatic, mandatory payroll deductions) with dependents; B. Self-employed (independent worker who earns a minimum wage – determined annually - is required to sign up for coverage and contributes a percentage of income in premiums. Enrollment is not automatic8) with dependents; C. Pensioner (retirees formerly in groups A or B and with a minimum pension – determined annually – contribute with an automatic, mandatory deduction from pension income9) with dependents; D. Fully Subsidized Beneficiaries (financing is the sole responsibility of the State and is based upon taxes levied on luxury goods, tobacco, liquor, imports and proceeds from the national lottery.) Since 2007, Costa Rica has required explicit enrollment of group D (state-insured) beneficiaries in the CCSS.1 There is a small por- tion of residents who remain unenrolled and who are classified as Figure 7. Distribution of CCSS Enrolled “uninsured”.6 These residents may only receive (free) emergency Beneficiaries, 2011. room care from public facilities but cannot access follow-up care, non-emergency prescription medications or any other non-emergency health services. 4 Migrant workers, particularly those from neighboring nations who are ineligible for benefits; 4 Unenrolled poor households (many with heads working in the in- formal sector) • Burdensome and complex enrollment procedures for poten- tial Fully Subsidized beneficiaries are blamed for the contin- ued exclusion of otherwise eligible households. However, indigenous populations, pregnant women, children under 18 Source: CCSS,Annual Statistics (Anuários Estadísticos) and individuals over 65 years old or with disabilities are entitled to all of the Group D healthcare benefits regardless of enrollment or immigration status. Self-employed or independent workers are often referred to as ‘Voluntary’ contributors as they are not automatically enrolled in the CCSS and must earn a minimum income in order to be required to contribute. Once enrolled, however, they are permanently in the CCSS system. Their status will then be changed (to ‘Salaried’, ‘Fully Subsidized Beneficiary’, etc…) if and as their employ- ment circumstances change. Public expenditure on health in Costa Rica is progressive7 4 The poorest 20 percent of the population (earning <5% of national income), receive close to 30% of public health expen- ditures. 4 The wealthiest 20 percent of families (earning 48% of national income) receive approximately 11% of public health expen- ditures. Costa Rica does not have a specific list of covered services, rather relying upon general ‘right to health’ legislative language and a general list of broad services to be provided by the CCSS (figure 8). Figure 8. CCSS Contributions and Services % of earnings % of earnings General Health Services Covered contributed to SEM§ contributed to IVM* Salaried/Wage-earning Employers 9.25% 4.91% workers Workers 5.5% 2.75% State 0.25% 0.25% • Health promotion, prevention, treatment, and Self-employed/ Worker with income rehabilitation Independent between a minimum and 10.5% (combined SEM & IVM) • Specialized and surgical medical assistance workers US$885 • Outpatient and hospital assistance Worker with income above • Pharmacy service/prescription medications 13.5% (combined SEM & IVM) • Clinical laboratory services US$885 • Dental/Oral health assistance State 0.25% 0.25% Fully Subsidized State .. Beneficiaries Source: World Health Organization “Universal Coverage in a Middle Income Country: Costa Rica”, World Health Report, Background Paper, No 11, 2010 Note: Former workers who contributed to the CCSS and are collecting a minimum pension also make a mandatory 5% contribution to SEM. Indigent pensioners do not. § SEM is the health portion of the CCSS *IVM is the disability and pension portion of the CCSS Basic Primary Health Care Teams (Equipos Básicos de Atención Integral en Salud, EBAIS) form the backbone of Costa Rica’s near-uni- versal primary health care system. 4 EBAIS are assigned a health area and typically comprise a physician, nurse and technician. 4 Responsible for preventive and curative services as well as health promotion for beneficiaries in their area. 4 Responsible for identifying and targeting poor households for enrollment with CCSS. Challenges and Financial Sustainability1 4 Better integration of health care network management units is needed to ensure the continuum of care across all levels with a focus on health promo- tion, prevention, and provision of patient support. 4 Identification and enrollment mechanisms for the poor must be harmonized. 4 Public health institutions require clearly delineated standards and improved incentives for quality and timely care. 4 Investments in basic technology to allow monitoring of key cost and perfor- mance indicators at the national and regional level are needed. References 1 Torres, Fernando Montenegro. “Costa Rica Universal Coverage Challenges and Opportunities Policy Note”, World Bank, 2012. 2 WHO / UNICEF. “Estimates for the use of Improved Drinking-Water Sources”, Joint Monitoring Programme for Water Supply and Sanitation. March 2012. 3 WHO / UNICEF. “Estimates for the use of Improved Sanitation Facilities”, Joint Monitoring Programme for Water Supply and Sanitation. March 2012. 4 World Health Organization. Global Health Observatory, Interagency estimates. 5 World Health Organization. Tuberculosis Profile, Costa Rica, 2012. 6 Rocío Sáenz, María, Bermúdez, Juan Luis and Acosta, Mónica. “Universal Coverage in a Middle Income Country: Costa Rica”, World Health Organization, World Health Report, Background Paper, No 11, 2010. 7 Cercone, James and Jimenez Pacheco Jose, “Costa Rica; “Good Practice” in expanding health care coverage – lessons from low- and middle-income countries”, in Gottret, Pablo, Schie- ber, George J. and Waters, Hugh R.: Good practices in Health Financing, lessons from reforms in low- and middle-income countries, 2008 8 Costa Rica, CCSS. “Regulations for the Affiliation of Independent Workers” http://costarica.eregulations.org/media/reglamento_afiliacion_trabajadores_independientes.pdf 9 Costa Rica, CCSS. “Regulations for Disability, Old Age and Death Insurance” http://www.cendeisss.sa.cr/seguridadsocial/index_archivos/reglamentoinvalidez.pdf This profile was prepared by Dr. Deena Class, Eleonora Cavagnero, Katharina Ferl, Sunil Rajkumar with inputs from Fernando Montenegro, Alexo Martinez and Michele Gragnolati.