Mongolia: Strengthening the Health Insurance System

Sovereign Project | 47007-001 Status: Active

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 Active
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 TA implementation is progressing well.
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:

The TA aims to increase the capacity of the Health Insurance Organization (HIO) to determine costs of services, strengthen provider payment systems, and facilitate monitoring the sustainability of the health insurance fund (HIF). The TA consultants developed a costing tool that applies both the step-down and the bottom-up costing model to determine costs of the most common services funded from HIF. The costing exercise was conducted in 17 hospitals, including private and public hospitals of all types and levels, and captured most common 8 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), the TA conducted costing of the cancer treatments and the primary care outreach services. 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. The HIO staff is now capable of conducting the costing study. 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 consultants developed a draft discussion paper on economic and actuarial analysis for SHI. The discussion paper will be backed up by (i) analysis of health service expenditures based on the SHI claims data; and by (ii) analysis of HIF revenue, including revenue collection, level of insurance premiums and government subsidies. The analysis of the claim data covering the period of 2013-2015 is ongoing.

Output 2:

The TA aims to strengthen management and organizational capacity of the HIO, including its purchasing capacity through selective contracting and monitoring of the health services quality. In order to promote standardized care in hospitals, the TA is assisting the HIO in defining a set of health services quality indicators, which are in line with international approaches and based on available data and resources. The quality indicators are intended to be used in several ways, such as monitoring quality of services and compliance with best clinical practices and deciding on what provider to contract. The consultants developed a set of indicators in consultation with 12 participating pilot hospitals; collected data for entire 2016 and compiled them. Workshops were conducted with staff of pilot hospitals and indicators were modified based on the received feedback. In 2017, the indicators will be introduced in all hospital contracts and the contract evaluation guidelines will be revised accordingly. The mission proposed the consultants and the HIO management to evaluate ongoing contracts with hospitals using the proposed indicators on a pilot base. The TA developed the checklists for 9 common conditions (e.g. hypertension, stroke, myocardial infarction), which will be used by HIO during the claim review process to promote standardized care and improve effectiveness of the HIF spending. The checklists are tested and updated in consultation with professional associations and hospitals. The TA also introduced the District Health Information System 2 software (DHIS2) that will serve as in-house software for HIPID to analyze hospital quality data and performance. Training manual on use of DHIS2 and quality indicator system was developed.

Output 3.

The TA aims to strengthen the governance of the SHI system through developing and institutionalizing a number of tools, such as client satisfaction surveys, and complaints and redress mechanism. The TA consultants developed standard tools for tracking client satisfaction based on review and assessment of the current healthcare practices. The baseline client satisfaction survey was conducted in 2015 using the new tools and with active participation of HIO staff. The study findings serve as a baseline data for the TA. The TA team also developed a four-year strategy for social marketing based on information obtained through client satisfaction surveys. Three options for implementation along with cost estimations are submitted to the HIPID. The project also aimed to strengthen the governance of the SHI system through capacity development of members of the national health insurance council (NHIC). The TA team finalized the NHIC capacity development manual (with clear objectives, methodology and contents) and be ready to implement the training program. However, the responsibilities of the NHIC are shifted to the National Social Insurance Council (NSIC). It was agreed that the TA will conduct capacity building activities for the members of NSIC.

Geographical Location Nationwide

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 will closely communicate with with insured members, including through regular satisfaction surveys to monitor progress to achieve outcome targets. The governance component of the project will involve key partners to ensure social partners participation in policy development and decision-making on health insurance. A complaints and redress mechanism will be developed for the insured members by 2015.

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 Staff

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 24 Mar 2017

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 961,549.07

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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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.

None currently available.

Evaluation Documents See also: Independent Evaluation

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Related Publications

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