Grant for Equity Fund to Help Poor in Cambodia Pay for Health Care Costs

MANILA, PHILIPPINES (16 November 2004) - ADB will help around 650,000 poor and ethnic minority people in Cambodia gain access to health care by establishing an equity fund for their major health care expenses, through a grant approved for US$1.847 million.

The grant, from the Japan Fund for Poverty Reduction, financed by the Government of Japan, will provide seed money of $1.36 million and support for an equity fund that will subsidize the health expenses of the poor and vulnerable population. The seed money will cover the first four years of the fund's operations.

It will cover medical expenses for major health emergencies, such as road accidents, obstetric interventions, and debilitating illnesses, for the poor in 10 health operational districts where the ADB-backed Health Sector Support project is providing assistance.

A nongovernment organization will be contracted to pre-identify the poor and ethnic minorities to receive coverage based on local definitions of what constitutes poverty and vulnerability. In areas with a high population of ethnic minorities, entire communities will be covered.

Those identified will be given a health card that will allow them to receive support from the equity fund when they seek the health care.

The project will also contract a national fund manager to be responsible for the equity fund, including conducting policy dialogue with various stakeholders. The fund manager will also be responsible for establishing the local equity funds in each of the 10 operational districts, and contracting local organizations to manage them.

"The high cost of health care is one of the leading causes of poverty in Cambodia and unless proper action is taken, the poor will not fully benefit from development and will always be vulnerable to health care shocks," says Erik Bloom, an ADB Social Protection Specialist.

"The project will ensure that subsidies reach the poor directly and reduce the risk of further impoverishment due to health care emergencies."

The project, Cambodia's first multi-district equity fund, builds on the experience of a number of ongoing small-scale pilots, which address the problem of government subsidies not reaching the poor.

The Government's Health Sector Strategic Plan (2003-2007) strongly supports the use of equity funds and targeted subsidies to help protect the poor from these health care shocks. The Government has indicated its willingness to support them through its own budget.

In fact, public health care spending in Cambodia has been increasing dramatically at 20% per year in the past six years, and the Government intends to continue increasing health spending at a rate of at least 10% per year in the next few years.

The Ministry of Health, the executing agency for the project, also sees equity funds as an important first step in its long-term goal of establishing social health insurance. It recently passed a strategic framework for Equity Funds to improve the coordination of different equity funds.

Various international development organizations have shown increasing interest in supporting equity funds and health insurance pilots, and the project may serve as a model for other large-scale and demand-side subsidies for the poor.

The JFPR was set up in 2000 with an initial contribution of Y10 billion (about $90 million), followed by additional contributions of $155 million and a commitment of $50 million.

Read the full JFPR report

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