47007-001: Strengthening the Health Insurance System | Asian Development Bank

Mongolia: Strengthening the Health Insurance System

Sovereign (Public) Project | 47007-001 Status: Closed

To improve the performance of the social health insurance system, the TA will strengthen the institutional and human resources capacity of the Health Insurance Organization and the Health Insurance Sub-Council. It will assist in (i) developing financial tools for social health insurance; (ii) improving internal management of the Health Insurance Organization, including contractual tools and monitoring of quality of health services; and (iii) improving the governance structure of the social health insurance system.

Project Details

Project Officer
Jigjidsuren, Altantuya East Asia Department Request for information
  • Mongolia
  • Technical Assistance
  • Health
Project Name Strengthening the Health Insurance System
Project Number 47007-001
Country Mongolia
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8466-MON: Strengthening the Health Insurance System
Japan Fund for Poverty Reduction US$ 1.50 million
Strategic Agendas Inclusive economic growth
Drivers of Change Partnerships
Sector / Subsector

Health / Health insurance and subsidized health programs

Gender Equity and Mainstreaming
Description To improve the performance of the social health insurance system, the TA will strengthen the institutional and human resources capacity of the Health Insurance Organization and the Health Insurance Sub-Council. It will assist in (i) developing financial tools for social health insurance; (ii) improving internal management of the Health Insurance Organization, including contractual tools and monitoring of quality of health services; and (iii) improving the governance structure of the social health insurance system.
Project Rationale and Linkage to Country/Regional Strategy

Since its establishment in 1994, the social health insurance system in Mongolia has demonstrated good achievements, including high coverage of over 90.0% of the population. Health care delivery has also been sustained despite severe budget constraints in the early 1990s at the onset of the socioeconomic transition in Mongolia. However, those insured are increasingly dissatisfied with social health insurance because of poor service quality provided by hospitals and increasing out-of-pocket expenditures.

High out-of-pocket expenses have resulted from social health insurance reimbursement ceilings, exclusion of costly procedures and diagnostic services from reimbursement, limited reimbursement for medicines, enforcement of various forms of co-payments, existence of informal payments, and the need to seek better quality care abroad. As a result, out-of-pocket payments for health services stood at 41.0% of total health expenditures in 2010, while utilization of hospital services was lowest among the poor, raising concerns about the inclusiveness of growth. In 2009, 3.8% of total households (or 27,442 households) experienced catastrophic health expenditures, and 1.8% of total households became impoverished due to health payments.

The government subsidizes social health insurance for 58.0% of the population, but targeting is ineffective and does not take into account the ability to pay. Ineffective targeting results in 10.0% of the population remaining uninsured (mostly poor unemployed and herders). Although, the government subsidizes 58.0% of the population this accounts for only 9.0% of social health insurance revenues, as subsidies are set too low (currently about $5 per year per insured person) and are not indexed to the rising cost of care. Employees and employers in the formal sector, representing 28.0% of the insured population, generate 86.0% of health insurance revenues. The disparity between the proportion of formal sector workers who are insured (28.0%) and the contribution to social health insurance revenues (86.0%) has frustrated employers and made social health insurance unattractive to them. The remaining 5.0% of social health insurance revenues are contributions paid by self-employed and informal workers.

The present social health insurance system governance structure has led to tensions within government organizations (mainly the ministries of finance, health, and population development and social protection) and between the Health Insurance Organization and the Health Insurance Sub-Council. There are no clear lines of accountability for social health insurance performance. Moreover, the current legal framework further fragments responsibilities by making the Ministry of Health instead of the Health Insurance Organization responsible for functions such as designing the benefit package, setting payment tariffs, and selecting service providers. There is also potential for serious conflicts of interest where the main service provider (i.e., the Ministry of Health) also sets payment tariffs and selects providers to be reimbursed by social health insurance. The social health insurance system also lacks mechanisms and an effective information system through which insured people can report complaints and provide feedback on social health insurance deficiencies; these are essential for informed decision making and accountability.

The Health Insurance Organization has limited capacity, particularly in terms of service costing, actuarial projections, contract negotiations, and monitoring of quality of services. It is merely one of the departments of the Social Insurance General Office and is subject to legal restrictions when it comes to staff and operational resource allotment. These circumstances have prevented the Health Insurance Organization from developing into a strong purchaser of health services on behalf of the insured population. Furthermore, for the Health Insurance Organization to act as a purchaser of care on behalf of the insured requires an effective health information system to monitor quality of services and financial autonomy of public hospitals to enter into negotiations with the Health Insurance Organization. In addition, all public hospitals are allocated social health insurance funds systematically regardless of performance, preventing the Health Insurance Organization from effectively selecting hospitals to contract with.

To address the deficiencies above, Parliament is revising the Citizens' Health Insurance Law. The revision of the law is undergoing a broad consultation process, including with civil society organizations. It is envisaged that the revised law will introduce broad reforms to improve governance and financial sustainability; improve targeting of government subsidies, including for the poor; increase access to an essential benefit package; and strengthen the autonomy and operational capacity of the Health Insurance Organization. The revised Citizens' Health Insurance Law will give more weight to reforms that the Health Insurance Organization and the Health Insurance Sub-Council have started to implement with TA provided by German development cooperation through GIZ and ADB.

Impact Increased financial accessibility of health services, especially for the poor
Project Outcome
Description of Outcome Improved performance of the social health insurance system
Progress Toward Outcome

The Technical assistance project (TA) aims to strengthen the institutional and human resource capacity of the health insurance organization (HIO) or Health Insurance Policy Implementation Department and the National Health Insurance Council (NHIC). The TA successfully achieved it's outcomes and outputs.

The TA assisted in developing different tools for increase capacity to determine costs of services, improve purchasing capacity through selective contracting and monitoring of quality of health services. The TA also assisted in improving the governance of the social health insurance system through developing and institutionalizing important governance tools such as monitoring sustainability of the health insurance fund, implementing complaint and redress mechanisms, and monitoring the members' satisfaction.

Major outcome indicators:

(i) Social health insurance coverage, including the poor and informal sector, increased from 83.0% in 2010 to 86.8% in 2016.

(ii) Social health insurance fund revenues for the citizens' whose contributions are subsidized by government increased from 9.0% in 2011 to 14.7% in 2016.

(iii) Satisfaction with inpatient care increased from 74% (2013) to 84 (2017); Satisfaction with outpatient care increased from 51% (2013) to 59 (2017); Satisfaction with discounted drugs program decreased from 49.9% (2013) to 45% (2017).

(iv) Percentage of out-of-pocket expenditures has not deteriorated (41.0% in 2010 and in 2014)

Implementation Progress
Description of Project Outputs

1. Increased capacity for social health insurance financing

2. Improved performance through management systems and capacity development of the Health Insurance Organization

3. Strengthened governance of the social health insurance system

Status of Implementation Progress (Outputs, Activities, and Issues)

Output 1.

To increase the capacity of HIO to determine costs of services and strengthen provider payment systems, the TA developed a costing tool that applies both the step-down and the bottom-up costing model. The costing exercise was conducted in 17 private and public hospitals and captured most common 9 diagnostic related groups (DRGs) that reflect the highest amount of SHI spending. In relation to expansion of the SHI benefit package under the revised social health insurance law (2015) on the request of the government, the TA conducted costing of (i) cancer treatment, (ii) outreach services in primary health care, and (iii) high-cost therapeutic and diagnostic interventions. The costing exercises applied learning by doing approach, where at first, the HIO and hospital staff learned from consultants the methods and tools, and then together with the consultants, adopted them into specific hospital conditions. Several training and workshops on costing methodology were conducted with participation of 235 staff of HIO and participating hospitals.

To facilitate cost control by enforcing standardized care in hospitals and strengthen the contracting capacity of HIO, the TA assisted in defining a set of quality indicators, which were piloted in 12 hospitals in 2015-2016. In addition, the TA developed checklists for most commonly reimbursed 9 key diseases that will be used in claim review to enforce standardized care in hospitals. The TA also assisted in introducing a software (DHIS2) to capture and compile quality related data for hospital performance monitoring purpose at HIO. In total, 720 people were involved in training and workshops conducted by the TA to support building common understanding and consensus on performance indicators among HIO, providers and medical professionals.

To facilitate the monitoring sustainability of the HIF and to support the government in measuring and managing the risks associated with unplanned changes in the SHI plan and regulations, the TA developed tools and instruments to analyze the HIF revenue and expenditure covering the period of three years (2014-2016) and conducted various training and workshops on practical application of tools that involved 85 participants in total.

Output 2.

The TA analyzed the internal management, operational procedures and business processes of HIO, and proposed recommendations for restructuring based on clustering of business processes into a functional structure and with anticipation of new functions as an independent HIO. The TA developed the Medium Term Strategic Plan (MTSP) for the period 2017-2021. Seven new objectives were defined along with the two key indicators population coverage and financial sustainability - based on analysis of health insurance coverage and financial projection of HIF revenue and expenditure through 2020. Based on the MTSP, the consultants also developed a business plan for 2018 together with HIO staff. To institutionalize new management concepts the consultants prepared capacity building materials and conducted several training, consultative meetings and workshops that involved 1294 people in total in 2015-2017.

Output 3.

The TA consultants developed standard tools for tracking client satisfaction based on review and assessment of the current practices. Two client satisfaction surveys (baseline and follow-up) were conducted in 2015 and 2017 using the new tools and with active participation of HIO staff. The TA developed two new procedures for more efficient grievance redress mechanism. The TA team also developed a four-year strategy for social marketing to increase understanding and awareness of social health insurance among the population. The TA also supported HIO in improving awareness among different stakeholders and mass media representatives on key concepts of the social health insurance in Mongolia.

To strengthen the capacity of the national council, the TA developed key documents necessary for the effective functioning of the NHIC such as (i) procedure on setting up a national council, (ii) operational manual for NHIC members, (iii) NHIC by-law, and (iv) terms of reference for the NHIC members. The TA also prepared the NHIC capacity development manual, however training of members of NHIC has been postponed due to delays in establishment of the council. The TA conducted a series of regional trainings on governance which involved 2192 provincial and district health insurance office staff.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design TA processing was carried out in close consultation with government officials and the donor community, including nongovernment organizations.
During Project Implementation The TA closely communicated with with insured members, including through regular satisfaction surveys to monitor progress to achieve outcome targets. The governance component of the project involved key partners to ensure social partners participation in policy development and decision-making on health insurance. A complaints and redress mechanism was put in place for the insured members in 2016.
Business Opportunities
Consulting Services The TA will be implemented over 36 months from 30 November 2013 to 31 October 2016. ADB will recruit a consulting firm using quality-based selection with a simplified technical proposal to provide 29 person-months of international and 56 person-months of national consultants, including experts in social health insurance policy and management, governance, and capacity building. A national health insurance specialist and a national administrative and finance coordinator will be recruited individually to facilitate day-to-day organizational and technical matters, liaise with the executing agency and other stakeholders, and monitor the outputs of the consulting firm. All consultancy services will be recruited in accordance with ADB's Guidelines on the Use of Consultants (2013, as amended from time to time).
Procurement The national health insurance specialist will be responsible for procuring the TA equipment under the supervision of the executing agency in accordance with ADB's Procurement Guidelines (2013, as amended from time to time). The executing agency will retain the equipment upon TA completion.
Responsible ADB Officer Jigjidsuren, Altantuya
Responsible ADB Department East Asia Department
Responsible ADB Division Mongolia Resident Mission
Executing Agencies
Ministry of Labor and Social Protection
Government Building-2
United Nations Street-5
Ulaanbaatar, Mongolia
Concept Clearance 14 Feb 2013
Fact Finding 14 Jan 2013 to 18 Jan 2013
Approval 25 Sep 2013
Last Review Mission -
Last PDS Update 20 Mar 2018

TA 8466-MON

Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 Sep 2013 13 Dec 2013 13 Dec 2013 31 Oct 2016 31 Oct 2017 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 1,500,000.00 200,000.00 0.00 0.00 0.00 1,700,000.00 25 Sep 2013 1,368,707.78

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Title Document Type Document Date
Strengthening the Health Insurance System Technical Assistance Reports Sep 2013

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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No tenders for this project were found.

Contracts Awarded

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Procurement Plan

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