Estimation of Fairness in Health Financing Among
Internally Displaced Persons and Local population in Samegrelo Region of West Georgia

Irakli Katsitadze MD MSC
2003 International Policy Fellow

 Draft Research Paper

July 30, 2003
TABLE OF CONTENTS

	List of Abbreviations	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

I.	Introduction	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

II.	Analysis of Health Financing	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

III.	Analysis of Current Situation of IDPs	. . . . . . . . . . . . . . . . . . . . . . . . . . . 

IV.	Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

V.	Fairness in Health Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

VI.	Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

	Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Annex 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Annex 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annex 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

List of Abbreviations

BBP			Basic Benefit Package

DFID			Department for International Development

EU			European Union

GEL			Georgian Lari
			 
GoG			Government of Georgia

FFC			Fairness in Financial Contribution

HCP			Health Care Providers

HFC			Health Financing Contribution

II			Inequality Index

MoLHSA		Ministry of Labor, Health and Social Affairs

MoRA			Ministry of Refugees and Accommodation

MoE			Ministry of Economy

MoF			Ministry of Finance

PHC			Primary Health Care

PHD			Department of Public Health

PREGP		Poverty Reduction and Economic Growth Paper

SISUF			Social Insurance State United Fund

SMIC			State Medical Insurance Company

STD			Sexual Transmitted Diseases

STI			State Tax Inspectorate

TB			Tuberculosis

TORs			Terms of Reference

USAID			United States Agency for International Development

WB			World Bank

WHO			World Health Organization

This paper reports the findings of the research project “Estimation of Fairness in Health Financing Among Internally Displaced Persons (IDPs) and Local Population in Samegrelo Region of West Georgia”. The research was conducted in Tbilisi and Zugdidi, Georgia, with the support of the International Policy Fellowship Program (IPF).

Research objectives were:

•	To examine current situation of IDPs in terms of poverty level and vulnerability and identify those areas that could negatively affect their health status.

•	To define the Fairness in Health Financing among IDPs and local population through computing Health Financing Contribution (HFC, ) Inequality Index (II) and Fairness in Financial Contribution (FFC) indices in order to allow for comparison between two socio economic groups;

•	To elaborate policy recommendations on the issues of health financing for the Government of Georgia (GOG), Ministry of Labor, Health and Social Affairs (MoLHSA) and other stakeholders. 

I.	Introduction
The Concept of Fairness of Health Financing
Societies have long demonstrated a special concern about the models and mechanisms of health sector financing. How the health systems are financed can have a profound effect on populations’ access to healthcare and thus on the health status of each individual. Much of the public discourse in countries undertaking health sector reform is focused on the design of health financing system and its fairness. 

According to World Health Organization (WHO) one of the challenges common to health systems in developing countries is to achieve fairness in the distribution of the financing burden, and protection of households from the risk of financial loss. The fairness of health financing is a subset of the three main goals of health systems that are good health, responsiveness, and fair finance. Fairness in financing and protection against financial risk is based on the notion that every household should pay a fair share. Fairness in financing embraces two critical aspects; risk pooling between the healthy and the sick and risk sharing across wealth and income levels. Risk pooling denotes the premise that the contributions for those that are healthy pay for the care of those that are sick, so that individuals who become sick are not struck by a double burden of sickness and financial costs of health care. Over the life span, each individual is likely to benefit from the financial security of risk pooling when she or he becomes sick. Risk sharing, while similar, refers to the premise that fairness does not mean equal contributions from all, regardless of income or wealth, but that contributions are greater from those who have more financial resources. In practical terms, embedding these notions of fairness financing is a step towards preventing the financial impoverishment of households when one of the members becomes ill.

Calculation of indices to estimate fairness of health financing of IDP and non-IDP households is based on estimates from household income and expenditure survey carried out within the scope of the research project in Samegrelo region of West Georgia and is defined as the ratio of total household spending on health to its permanent non-subsistence income, or capacity to pay.  Total household spending on health includes payments towards the financing of health services through out of pocket payments, premiums paid to private insurance or community health financing schemes, social insurance, and taxation (mainly income tax and value-added tax). Fair financing begins, therefore, from an ex-post perspective since it refers to the amount that a household paid in the past for better healthcare through all payment mechanisms compared to their income. For this analysis, health finance is considered perfectly fair if the ratio of total health contribution of households to their total non-food spending is identical for all households, regardless of their income, their health status or their use of the health system. The definition of Fairness of Health Financing is constructed entirely from monetary estimates of contributions into the health care system. The methodology focuses on how health care is financed by households through out-of-pocket payments, tax contributions, social insurance, and private insurance. 

To allow for comparisons, the distribution of fairness of financing across IDP and non IDP households has been summarized using a Health Financing Contribution index.  The index is designed to weight heavily those households that have spent a very large share of their beyond subsistence income on health. The index thus reflects overall inequality in household financial contribution into the health system, but particularly reflects those households facing impoverishing levels of health expenditure. The index makes it possible to rank different socio economic groups such as IDP and non IDP based on the attained score. 

Data Requirements
Estimation of fairness of health financing among IDP and non IDP households was based primarily on information gathered through household living standard survey conducted in Samegrelo region of West Georgia. Equally important to our estimations were following sources of data and information:

•	Household and health surveys that included detailed information on health status, income at the individual level and household expenditure by goods and services. 
•	Government taxation documents, including information on income tax, sales tax, value-added tax, property tax. 
•	National Health figures compiled by Department of Health Statistics. Most NHA estimates provide a benchmark to check the reliability of some of the survey data.
•	Social security and health insurance laws that provide information on premiums and other contributions to health system.
•	Health Systems Profiles that describe the structure and financing of health system.

II.	Analysis of Health Financing in Georgia

Background Information
Georgia was among the first republics of the former Soviet Union (FSU) to declare independence in 1991. It has a population of 4.6 million people in a geographical area of about 70,000 square kilometers bounded by the Black Sea, the Russian Federation, Azerbaijan, Armenia, and Turkey, and is strategically located as a trade and transit corridor in the Caucasus, between Europe and Asia.
 
The breakup of the FSU disrupted traditional trade and payment links and led to the disruption of national economy.  These difficulties were compounded by civil conflicts in Abkhazia and South Osetia, resulting in large movements of IDPs. As a result, output fell by more than 70%, capacity utilization in the industrial sector dropped to about 20% of previous levels between 1990 and 1995. Heavy disruptions in agriculture occurred, and tourism revenues collapsed. Significant external debt and payment arrears were accumulated, while tax fiscal and monetary policies led to large budget deficits. By the end of 1993, annual inflation had reached 8,400%.
  
In 1994 the Government embarked on a comprehensive reform program to rebuild the economy, with the support from the World Bank and the International Monetary Fund. The Government’s fiscal and monetary policies were successful in restoring growth and sufficiently improving internal and external imbalances. Real GDP growth resumed in 1995 and exceeded 10% in 1996 and 1997. Inflation was reduced to single-digit levels by 1997. A new national currency, Georgian Lari (GEL) was introduced in September 1995, and remains broadly stable against the dollar. In 2002 exchange rate was 2.15 Lari per 1 US Dollar. 

The health sector reform initiated by the government of Georgia in mid-1995 was incited by the deep crisis in the health care system experienced after the dissolution of the Soviet Union, followed by major economic breakdown, civil unrest and armed conflict. By 1994, average public sector per capita spending in the country had fallen to less than US $1. The initial reforms envisioned transformation from a national health service to a social health insurance system, with substantial changes in the roles and responsibilities of the central and local governments. It was intended that the state would have a stewardship function through strong regulatory, financing, and licensing mechanisms while moving away from the actual provision of care. Limited government financing was directed to priority public health programs and a basic package of clinical services on contractual bases between an independent state health agency and health care providers. An IDA-financed project was approved in 1996 to support specific components of health financing reform.  While clearly having made some progress in reforming the health system, most of these reforms have not reached the level of the consumer and have insufficient impact on the quality or accessibility of health care. Without any question, the major issue is still heath care financing, complicated by excessive human and institutional capacity.
Georgian health care system, as it exists today, is a mixture of two fundamental models of health insurance - model introduced by Bismark and model of National Health Insurance. Bismark model of health insurance as it is practiced in Germany is based on compulsory contributions with rights to choose among different health insurance funds and providers. According to National Health Insurance, so called Beveridgian system, citizens have equal rights with limited choice of health providers, irrespective of the amount of contribution they make through taxes.

Health Financing in Georgia
Health care reforms in Georgia attempted to implement new health care financing system focusing on:

•	Elaboration of a Basic Benefit Package which would introduce principles of social solidarity in health care system;
•	Introduction of new system of social taxation which would be based on employer and employee contributions.      

According to Georgian Constitution all citizens of the country are entitled to free medical services included in a Basic Benefit Package. However, due to financial barriers, large part of the population, mostly poor and disadvantaged, are deprived of even basic health care services. This contradicts the State Health Care Strategy described in the Poverty Reduction and Economic Growth Paper (PREGP).

The main purpose of introduction of BBP in 1995 was to offer free and equitable access to quality health services for all citizens of the country. In 2003 the BBP consisted of 26 State health care programs and 5 municipal programs. In spite of the fact that State health programs have been chronically under financed during past years, budgeted amount for health programs increases from year to year. The consequence of this inappropriate State policy and is limited access of large part of the population to health care services.

There are two categories of health finances in Georgia: the institutional resources with 3 origins: Central Budget; social contributions or “social taxes”, Municipalities) and the private resources also with 3 origins: out-of-pocket; private insurance companies; and community based organizations.

According to above mentioned health financing mechanisms Georgian health care system is financed through public and private funds. Public financing comprises of transfers to Social Insurance State United Fund (SISUF), Public Health Department (PHD) and different health Schemes (military, internal affairs etc.). These funds mainly come from the State and municipal budgets. Private financing comprises of direct payments done by the patients to health providers mostly unofficially, to the private insurance companies and community based health financing organizations. According to different health expenditure surveys the main sources of health financing are out of pocket payments to health providers which made up 85% of total health expenditure in the country.

Public Resources 
The amount of funds transferred to finance state health programs and the rates of taxes and social contributions is a subject for vote by the Parliament of Georgia every year. A major problem related to health financing is that in reality the amount effectively transferred from Central budget to the PHD and SISUF significantly differs from the amount initially approved by the Parliament. In 2000 the difference between budgeted amount and transferred amount was 60% and in 2001 88% respectively. Amount of money transferred for state funded health programs is very dependent on collected social taxes during the year. In Georgia social taxes are collected by State Tax Inspectorate (STI) on a monthly basis according to the employers’ declaration of social contributions. With the existing system STI faces significant problems that hinder appropriate tax collection from year to year. STI is unable to determine whether the amount collected through social taxes corresponds to the salaries paid by employers. Because of the inexistence of personal ID numbers it is impossible to identify for how many companies each person works for and what is his/her aggregate taxable monthly income. In addition to that, problems arise because of the absence of clear distinction among funds transferred to SISUF in terms of to which social sector (Pensions/Health/Unemployment) what portion of transfer should be allocated. So far, SISUF has allocated funds to different social programs according to the Government’s priorities for that particular period. During past years Governments priority in social sector has been payment of pensions for the elderly population and less attention has been paid to health care programs. Above mentioned situation is the main cause of inefficient financing of BBP and other state health programs consequence of which is malfunctioning of the whole health care sector.    

The main recipients of the public health funds during 2003 have been SISUF and Department of Public Health. These funds have originated from the Central Budget - 32,3 million GEL, the social contributions – 27,6 million GEL, and transfers coming from the municipalities – 9 million GEL (68, 8 million in total). Final recipients of public funds for health care have been licensed, private and public health care providers contracted by SISUF and PHD. Health providers have been paid according to the monthly invoices submitted to SISUF and PHD. However, because of insufficient funding, provider reimbursement has been delayed for several months, if ever paid. At the same time because of inappropriate invoice verification and processing systems there have been several cases of fraud, “ghost” payments and double payments to the providers.    

According to the Georgian legislature municipalities should allocate at least 10% of their budget for health care expenditures, however, because municipalities face the same problems as State regarding tax collection, they are unable to allocate full amount of planned health budget. These funds are transferred to the primary health care providers. Because of lack of State or municipal financing providers require patients to pay for their health services out-of pocket, either officially according to special tariffs or through so called “under the table payments” which remains the most popular payment method. 

Municipalities are responsible for implementation of BBP and financial relations with local health providers. The municipalities are officially responsible for the local strategy and the supervision of the primary health care services. Annually the local council of each municipality approves the health budget. According to the law, the municipalities must allocate at least 10 % of their annual budgets to local health needs, to finance part of BBP, public health programs, programs for vulnerable etc.

Public Health Regional Departments (PHRD) are in Charge of managing national programs and collecting invoices from local health providers and sending them to PHD. Local health providers are reimbursed according to submitted invoices.

Another government entity established at the regional level is Regional Health Department (RHD). RHDs are official representatives of MoLHSA in the regions and play key roles in the informing MoLHSA on licensing and accreditation processes in the regions as well as condition of medical facilities and equipment. 
   
In rural areas according to the standards of MoLHSA one PHC facility should provide medical services to the population of up to 2500 people, however, due to the lack of financial resources, inadequate/obsolete equipment, delayed physician’s salaries, absence of medical supplies and pharmaceuticals and due to the fact that patients are asked to pay out of pocket for medical services that they are entitled to receive for free the number of patients visiting PHC facilities is very limited and many people prefer self treatment or non-traditional methods of healing.

Private Resources
Private financing of health care services remains the most prevalent way of getting health services for the majority of population, both in rural and in rural areas. According to various sources up to 85% of health care services are financed through out of pocket payments. This percentage is approximate because most of this type of payments are unofficial and can’t be registered. Up to 55% of out of pocket payments go to pharmaceuticals, 25% to secondary health care, 20% to primary health care services and 5% to other services. Prevalence of out of pocket payments facilitates self treatment and increases chances of making catastrophic payments for health which is one of the main causes leading households into poverty in the country.    

Private health insurance in Georgia is still on early stages of development and approximately 1% of the population gets health services through private insurance. Private insurance is based on the principles of risk selection which creates barriers for the participation of elderly and chronically ill people in these schemes. The taxation system is another barrier for the development of private insurance business in the country since insurance premiums paid by employers and employees are subject to taxation in Georgia.
Community based health financing schemes established in various regions of the country represent effective possibility for financing health care, especially primary health care and pharmaceuticals. Participants of such schemes are usually people who are self employed or are engaged in so called informal sector of the economy (farmers, small entrepreneurs etc.)  Most of these people don’t pay any State or local taxes and therefore don’t contribute to the social security system. Community based health financing has become operational thanks to various international donors and development organizations working in the country (DFID, EC, Care, Oxfam GB, Novib etc). 

III.	Analysis of Current Situation of IDPs in Georgia
General Overview
Military Conflicts in Autonomous Republics of Abkhazia and South Ossetia and war torn Republic of Chechnia generated significant number of internally displaced persons (IDPs) and refugees in Georgia. In 2002 in total 264,217 IDPs and refugees were registered in the country. The first group of IDPs, ethnic Georgians, came in 1990-1991 from South Ossetia. Another, larger group of IDPs, that presently composes 95% of IDPs in the country, came from Abkhazia in 1992-1993. In addition to these, Georgia hosted more than 10,000 Chechen refugees from Russia. The Conflicts have seriously damaged population’s socio-economic status and altered its geographic distribution and demographic composition. Currently there are 241 733 IDPs from Abkhazia and 11 631 from South Ossetia. IDPs represent approximately 5% of the Georgian population.

IDPs have compactly settled in three locations. There are large IDP settlements in capital Tbilisi where 32% of IDPs reside in private and collective accommodation. 27% of displaced people have settled in Samegrelo region, mostly in collective accommodation as well as in private settings with relatives. More than 10% of IDPs reside in collective centers in urban and rural areas of Imereti region. Samegrelo region, particularly one of its districts – Zugdidi, which is selected as the research site, due to its adjacent location to Abkhazia, has a disproportionately large ratio of IDPs over the local population. The district’s 130,000 local population received over 60,000 IDP-s.

Almost a decade has past since most of IDPs left their homes and there is little expectation that they will be returning in the near future. To date, there have been very few studies comparing two closely cohabitating groups, IDPs and local population. Less information is available describing health status of IDPs. To this end, besides concentrating on Fairness of Health Financing Issues, the research project has focused on answering question of whether IDPs are more likely to live in poverty confronting greater risks associated with unafordability of health services and consequently having worse health status than local population.
Income
According to different sources more than half of Georgian population lives below the officially determined poverty line. According to Labor Force Survey conducted in Georgia in 2001 the average monthly income in 1999 in Georgia was 79 GEL per person. In 2002, Georgian Government allocated 62 million GEL ($30 million USD) for IDP related issues. Of this, 41 million ($19 million USD) was allocated for monthly allowances. As reported by the Ministry of Refugees and Accommodation, IDPs in collective centers received monthly allowance of 12 GEL, while those living in private accommodation received 14 GEL. In 2002 the Norwegian Refugee Council (NRC) reported that more than 90% of IDPs, received a government pension or other allowances. According to the survey almost 80% of IDPs living in collective centers reported receiving a government benefit. Comparatively, International Federation of the Red Cross (IFRC) reported that 61% of the local population was receiving government assistance in 2000. According to State Department of Statistics’ national survey in 2002, 40% of the Georgian population was receiving a government benefit.

In addition to IDP benefits, elderly IDPs are eligible for other state transfer payments such as pensions. For example, if an IDP is over 65 years of age, in addition to monthly allowance of 12 to 14 GEL, he or she receives monthly pension of 13.4 GEL. In addition to government benefits, IDPs receive humanitarian assistance provided by different international humanitarian and development organizations. IFRC reported that 39% of IDPs living in collective centers received humanitarian assistance, compared to 30% of IDPs in private accommodation and, 12% of the local population. However, humanitarian aid has been decreasing in Georgia. As Save the Children’s survey reports, in 2002 approximately 30% of IDPs living in collective centers in west Georgia reported receiving humanitarian aid in the previous three months. According to SDS in 2002, 5% of the general population reported receiving some form of humanitarian aid in the previous three months.

According to SDS in 2000 an average monthly income of IDPs living in collective centers was 113 GEL, for IDPs living in private accommodations 143 GEL, and 154 GEL for the local population. In February 2002, Save the Children’s survey found a median monthly household income in 2002 of 111 GEL for IDPs living in collective centers in west Georgia and 171 GEL for the local population. 4% of the IDPs living in collective centers reported earning a monthly household income greater than 300 GEL. According to the same survey poverty rate of 82.8% was for IDPs living in collective centers in west Georgia when accounting for only monetary income. When accounting for both monetary and non monetary income, 70.8% of IDPs living in collective centers were below the official poverty line.
To be updated after the survey
Employment
International Federation of Red Cross reported an unemployment rate of 45% among IDPs living in collective centers, 31% for IDPs living in private accommodations and 15% for local population. Save the Children’s survey in 2002 found an unemployment rate of 40.2% among IDPs living in collective centers in west Georgia, and 23.1% for the local population. Thus, IDPs living in collective centers have a higher rate of unemployment than IDPs living in private accommodations and the local population.

More than half of IDPs living in collective centers are self-employed comparing to about one quarter of IDPs living in private accommodation. IDPs are mostly self employed in small trade business while local population in agricultural sector. This involvement of IDPs primarily in trade and the local population in agricultural production is due to the better access to land. In capital of Tbilisi, IDPs are much better off in terms of wage employment than IDPs living in regions and rural areas of Samegrelo and Imereti.
To be updated after the survey
Housing
As mentioned above there are three types of housing where IDPs have been accommodated.
•	Collective centers (former hotels, hostels, schools, hospitals, etc) owned by state; 
•	Private housing owned by relatives/friends and rented or purchased apartments or houses; 
•	Abandoned apartments or houses in rural areas. 

According to the Ministry of Refugees and Accommodation, in 2001, more than 40% of IDPs were residing in collective centers and 50% in private accommodation and the remainder in other types of accommodation. Private accommodation usually implies both host family and independent residency. More limited data is available on rented accommodation or occupation of abandoned buildings. Collective centers often do not meet even minimum living standards which was IDPs’ main concern so far. In collective centers each IDP occupies from 8 to 9m2 per person compared with 16-18m2 for the local population and 32m2 for the general population. According to IFRC report, 30% of IDPs living in private accommodations own apartment or house, 47% live in accommodations provided rent free from a private individual or the state. But from these findings it is still unclear if the remaining 23% are renting their living space. It is believed that this group of IDPs may be living with a host family. Local NGOs believe that many of the IDPs that originally purchased housing have sold it, and moved to collective centers, because they have exhausted their savings and their inability to earn a regular income. In general, all data indicate that compared to almost 95% of the general population owning their apartment or house, significantly fewer IDPs own their accommodations. 
To be updated after the survey
Access to land and services
Due to the increasingly high cost of electricity most of IDPs can’t pay for the electricity especially during winter time. In 2002, IDPs reported on average 7 hours a day having electricity comparing to the general population having on average 9 hours of electricity a day in the winter months. IDPs in collective centers in west Georgia primary use wood for cooking and heating during winter months. During the rest of the year, IDP households in collective centers have electricity, with an average daily supply of 13 hours. According to Save the Children’s survey IDPs consume more electricity than the local population and those in private accommodation. 

IDPs in collective centers have better access to water than IDPs living in private accommodations or the local population, however IDPs living in collective accommodation receive few hours of water (11 hours), on average, than the other two groups (14 and 15 hours respectively). In terms of quality of water, 79.1% of IDPs living in collective centers stated quality from average to very good, compared to 82.1% of the general population.

Access to credits
According to different sources greater percentage of IDPs living in collective centers borrow money during the winter months. Usually they borrow from relatives and friends and few households borrow money from financial institutions or micro-credit organizations. This is because of little/not stabile income and requirement of collateral. Another reason why micro-finance institutions wouldn’t lend money to IDPs is that most of the money is spent on so called Non-productive goods such as food, medicines etc. rather than on income earning activities that generate resources to repay the loan. IDPs living in private accommodations and those who own an apartment have better access to credits. Most of these IDPs borrow from micro-credit not-for profit institutions or from international or local non-governmental organizations. Of the two, international NGO are the predominate providers of micro-credit. This is due to international NGOs having more experience in micro-credit lending, better funding and tax-exempt privileges. Another reason for that is collateral. The amount of loans that IDPs can access varies from $100 to $500 with annual interest rate of 20-24% percent which is higher comparing to 18-20% for general population. A number of micro-credit programs, build on issuing individual loans, require collateral of some sort. As mentioned previously, this is difficult for many IDPs, especially those living in collective centers. Thus, many NGOs have turned to “group guarantee” lending schemes for IDPs in which group pressure is the form of warranty of repayment. 
To be updated after the survey
Demographic Composition of IDPs
Many studies showed that proportion of younger population of 0-17 years of age increases and proportion of retired people among IDPs decreases from year to year. Save the Children’s surveys found an average age of 35.6 years for IDPs living in collective centers and 37.6 years for the general population. The size of households of IDPs living in collective centers is smaller than local population (3.5 vs. 3.7 members), but slightly higher than households of IDPs living in private accommodations (3.4 members). Single person households are more prevalent among IDPs living in private accommodations (16.4%) than among IDPs living in collective centers (15.9%) and the local population (12.9%).

Marriage rates among IDPs are lower comparing to general population that could be due to the limited living space as well as their inability to economically support a family. There is a higher percentage of single parents among IDPs living in collective centers (13.7%) than among the general population (7.1%). However, the percentage of divorced households is almost equal. 
To be updated after the survey

Education 
During the Soviet period, public education, both undergraduate and graduate, was free and mandatory for everyone. During past 10 years government spending on education has significantly decreased. The quality of education has also declined. Government has developed special policies for IDPs to ensure there access to free/partially free education. However, some studies indicate that barriers such as illness, lack of clothes, lack of school materials, distances etc. are serious barriers hindering IDPs access to education. Some studies report that in public schools unofficial monthly fees are collected by school administration. Almost all reports conclude that more than 95% of children are enrolled in schools. 

According to various surveys approximately one fifth of the IDPs, as well as the local population, have a university degree. About one third of the relevant age-group (18- 24 years of age) is continuing their studies, most of them at university or technical college. Slightly fewer IDPs in collective centers were enrolled in graduate education due to lack of finances. According to IFRC unlike housing, described in the previous section, education is characterized by equality among IDPs and general population. 
To be updated after the survey
Health Care for IDPs
There are 33 medical institutions providing medical services for IDPs and located on the entire Georgian territory. These include 10 PHC facilities and 11 ambulatories where approximately 1000 IDP doctors and medical personal are employed. 

According to Article 5 of the Georgian Law on IDPs “state authorities shall provide them with free medical aid. Cost of treatment at state-funded medical institutions shall be compensated by the state according to the established standards. The same law determines that handicapped, old, children and families lacking a breadwinner should be provided free medications. 

Although the median health care expenditures were similar, IDPs living in collective centers had more visits to hospitals, nontraditional healers, and pharmacies than the general population. IFRC’s survey reports that household savings were the major source of money to pay for healthcare costs. Although IDP households reported using their savings, they were more likely to seek financial assistance from relatives and friends.
To be updated after the survey

IV.	Methodology

 Survey Methodology
As mentioned above the main source of information for the research was household living standard survey conducted in Samegrelo region of West Georgia. The Survey was conducted in 23 villages of the region where large number of IDPs cohabitate together with local population. Data was collected from 1000 households. Questionnaire used for the survey is attached in annex 3. Questionnaires were distributed to the respondents and data was collected by students of Tbilisi State Medical University (TSMU). Because of financial constraints students were selected locally, all of them were originally from Samegrelo region therefore had better experience in communication and interaction with both IDPs and local population. Prior to the survey, students participated in special training session on survey techniques conducted in the end of June at TSMU. 

The survey used stratified random selection method. As a first step data collectors prepared an alphabetical list of all villages in the region (about 70), in which IDP and non IDP population represented about equal number. Then every third village was selected from the list regardless their location, economic status, proximity to the regional center and other variables. Total 23 villages were selected in each village the population was stratified in to two categories – IDP and non-IDP (on average each village contained about 200 households). In each village every second household was approached for the interview. The response rate was less than 50%. Overall the data was collected from about 1000 households with 60 over 40 local/ IDP ratio.

Since the demographic proportion of IDPs and local population is almost equal, representatives of both social, gender and age groups were interviewed equally. The respondents were assured in anonymity and explained the purpose of the research.  Data analysis was performed in EpiInfo software.

Fairness in Health Financing Methodology 
Based on the data from survey and other available sources of information, the basic indicator of health financing contribution (HFC) at the household level has been estimated using WHO fairness in health finance assessment methodology. The methodology allowed estimating the ratio of total household spending and its total capacity to pay through computing Health Financing Contribution Index (HFC). To facilitate comparison of different countries and different socio-economic groups within countries, to rank them according to fairness in health financing, from HFC an inequality index (II) have been constructed. From II the score of Fairness of Financial Contribution (FFC) has been derived. The FFC index reflects inequality in household financial contribution and reflects those households at risk of impoverishment from high levels of health expenditure. The index is designed to weight highly households that have spent a very large share of their income beyond subsistence on health. 

HFC Calculation			
The health financing contribution of a household (or HFCh) can be summarised in the following formula.

The numerator (HSh) is the total household spending on health including all payments towards the financing of the health system through taxation, social security contribution, private insurance, and out-of-pocket payments.

The denominator is a measure of the household’s permanent above subsistence income estimated for a household’s total expenditure (Exph) incremented by adjusted tax payments used on health not already included in total expenditure such as income tax and property tax (aTaxh) and net of food expenditure (Foodh). 

The contents of both the numerator and denominator are described more explicitly in Annex 2.

Score Calculation
The inequality index is based on the mean of the cubed absolute difference between the financial contribution of a given household and the mean of financial contribution of all households in a country (HFC-bar), and normalized by the maximum value of the cubed difference of this fraction (0.125).
The index is of the form:
Inequality Index (II) 

The fairness in financial contribution index (FFC) or the score is intended to reflect inequality in household financial contribution but particularly reflects those households at risk of impoverishment from high levels of health expenditure. The index is further designed to weight highly households that have spent a very large share of their income beyond subsistence on health. The score is defined by adjusting the inequality index in the following way so as to provide a value from which countries or different social groups may be ranked:

Fairness in Financial Contribution, or score 

The score ranges between 0 and 1 and scores tending to 1 relate more fair health financing mechanisms.

V.	Fairness of Health Financing among IDPs and non-IDPs in Georgia

Health Financing Contribution Index

Inequality Index

Fairness of Financing Contribution Index 

To be calculated using data obtained from survey 

VI.	Discussion

Bibliography
World Health Report 2000, WHO, Geneva.

Murray C and Frenk Julio, GPE Discussion Paper No.6, November 1999. A WHO Framework for Health System Performance Assessment, WHO, Geneva.

Ministry of Finance, Reports 1999, 2000, 2003.

Constitution of Georgia, 1995.

Aufret P. Primary Health Care Financing in Georgia, 2003

“Population’s health care expenditures and unrecorded medical service” EU/TACIS/2000.

IDP’s Refference Book, UNHCR, 2002

United Nations High Commission for Refugees 2001

State Department of Statistics, 2001, 2002.

Ministry of Refugees and Accommodation, 2002. 

Kei Kava Bata, Patrick Lyndon, World Health Organization, 1999.

To be updated

Annex 1
Survey Questionnaire
(Translated from Georgian)

Household Living Standard Survey

Supported by International Policy Fellowship 2003

Interviewer’s note: Start the Interview with presenting yourself. Read the information bellow to the respondent.
Information to the respondent:  
The research project aims to estimate fairness of health financing among IDPs and local population, identify issues in health financing and elaborate recommendations for the government of Georgia. 
This survey will be conducted in the communities of 23 villages of Zugdidi district. We would like to get information mainly on the health status of the people, health care providers people seek and their expenditures on health care and other needs. 
Participation in the survey is voluntary. 

The information obtained is confidential.

 Identification: 

Date of Interview___________________________________________________________
 
Interviewer’s Name______________________________________________________________

Village_____________________________________________________________

Respondent: 			1. Head of Household    		[_____]
                                                2. Spouse of Head of household    	[_____]
Sex of Respondent_________________________________________________________

Age of Respondent_________________________________________________________

Result of Interview                      1. Completed   [_____] 
                                                     2. Incomplete  (reason)____________________________________________________________

PART I:  Household Demographic Characteristics

For this study household refers to the spot of people leaving at the same house and sharing their revenues and expenditures.

1. 	Please, give us the demographic data on your Household members

	I  member	II  member 	III member	IV member	V  member	VI member	
Name of Household Member							
Sex     (1) Male;   (2) Female							
Birth date (year) 
							
Education (1)school;  (2)higher							

Socio-Economic Factors:

 We are interested in economic characteristics/activities of the households.
 
2.	Please , indicate the sources of revenues ( in form of cash, transfers or products)  for each members of your family

While filling out this table, please, read the codes and their explanations and write the adequate figure in the table: 

	I  member	II  member 	III member	IV member	V  member	VI member	
Name of Household Member							
Main source of Income 
							
Additional source of income 							

Codes of Main and Additional Sources of Income

1.	Revenues (salary)  from State institutions;
2.	Revenues (salary) from Private organizations;
3.	Revenues (salary) from Non-Governmental organizations or political parties;
4.	Revenues (salary) from International Organizations;
5.	Revenues from Private  business;
6.	Revenues from Individual Business (retail, transport, private practice, etc);
7.	Revenues from Private agricultural activities;
8.	Revenues from renting the estate;
9.	Pensions, stipend, social aid;
10.	No revenue at all.

3.	Does your family own the following assets: 
  
(Responses while describing condition: 1. Poor 2. good 3. excellent)

	 ITEM	Quantity	Condition	
1	Land 			
2	House			
3	Car			
4	Tractor			
5	Mini-equipment to work on land			
6	TV			
7	Radio			
8	Refrigerator			
9	Water Hitter			
10	Washing machine			
11.	Generator			
12. 	Scat			

4.	What were the monthly  expenses of your family on following items or services:

	ITEM	COSTS	
1	Food		
2	Cloth /shoos		
3	Household goods (gas stove, iron, oil stove..)		
4	School children education		
5	High education and related expenses		
6	Entertainment 		
7	Medical services		
8	Electricity		
9	Wood/petrol/diesel		

	ITEM	Yes   or   No	COSTS	
1	Buying/building  house			
2	Buying furniture			
3	Buying car			
4	Electric devices (Refrigerator, Wash machine, TV etc.)			
5	Funeral/wedding			
6	Buying cattle			
5.	Did your family have expenses on following items during the last year?

PART II:    Household Members Health Status 

6. 	Does any member of your family have following chronic illnesses?
          (Please, write within the table Yes or No). 

Interviewer’s note: Chronic health conditions include long-lasting or re-current health problems that cause impairment or disability. Long-lasting means a condition that exists for longer then two to three months.
	I  member	II  member 	III member	IV member	V  member	VI member	
Diabetes							
Goiter							
Hypertension							
CHD / Myocardial infarction							
CVD / Stroke							
Rheumatism							
Mental diseases/disorders							
Heritable diseases							
Physical impairment 							
Tuberculosis							
Ulcer							
Chronic Cholecistitis							
STI							
Hepatitis B or C							
 Other (please, specify)	

7.	Has any household member had any type of illness during the last month?

       (Please, write within the scheme Yes where appropriate)

I member	II  member	III member	IV member	V  member	VI member	

						

Part III:   Utilization of Health Services

8.	Do you apply to health professionals if you have? 
(1)	Minor health problems?        Yes -------   No -------
(2)	Chronic health problems?     Yes -------   No -------
(3)	Acute health problems?         Yes -------   No -------

9.	What are the reasons for not applying to the health professionals?

(1)	 Problem is too  minor  _____________
(2)	 Lack of money  ____________
(3)	 Lack of trust to the medical personnel_____________
(4)	 Lack of equipment  in health facility____________
(5)	 Long distance____________
 
10.	Please, indicate how do you perceive the quality of medical services in following institutions: (please, circle one) 
	Medical Facility 	Attitude of medical personnel 	Medical service	Hygienic conditions in the facility	Privacy	
1	Village health post 	1. Poor
2. Good 
3. Excellent	1. Poor
2.Good 
3. Excellent	1. Poor
2.Good 
3. Excellent	1. protected
2.unprotected	
2	District ambulatory	1. Poor
2.Good 
3. Excellent	1. Poor
2.Good 
3. Excellent	1. Poor
2.Good 
3. Excellent	1. protected
2.unprotected	
3	IDP policlinic	1. Poor
2.Good 
3. Excellent	1. Poor
2.Good 
3. Excellent	1. Poor
2.Good 
3. Excellent	1. protected
2.unprotected	
4	District Hospital 	1. Poor
2.Good 
3. Excellent	1. Poor
2.Good 
3. Excellent	1. Poor
2.Good 
3. Excellent	1. protected
2.unprotected

11.	Where did you apply for medical care during the last one month?  

	Medical Facility 	 Number of  Applications	
1	Village health post 		
2	District ambulatory/policlinic		
3	IDP policlinic		
4	District Hospital 		
5.	Tbilisi  ambulatory/policlinic		
6. 	Tbilisi Hospital		

12.	Approximately how much did you spend on treatment and medicine in each of these medical facilities during last month? 

	Medical Facility 	Cost of  examination 
and diagnosis	     Cost 
       Of
   medicine	   Cost 
       of 
 Transport	
1	Village health post 				
2	District ambulatory/policlinic				
3	IDP policlinic				
4	District Hospital 				
5.	Tbilisi  ambulatory/policlinic				
6. 	Tbilisi Hospital				
7. 	Did not apply at all				

Interviewer’s note: In case the patient applies to hospital care without applying to the PHC, please, ask the question: 

13.	Why did you apply to the hospital care?  (Please, circle one or more reasons from list bellow): 
1.	There is lack of  medicine in the health post/ambulatory___________________
2.	There is the lack of equipment in PHC level___________________
3.	The PHC staff is not enough qualified__________________
4.	Limited operating hours in PHC  points__________________
5.	Referred from the PHC posts__________________
6.	Prefers other health provider_________________
7.	Other reasons____________________

14.	To your knowledge, is any of medical service covered by the state programs in your district?

	Type of Health Facility	Type of Health Services/Support	 Yes or No 	
1. 	Out-patient care 	Examination and diagnostics		
		Nursing		
		Medicaments		
		Vaccination		
2.	Hospital care	Examination and diagnostics		
		Surgery 		
		Medicaments		
		Nursing		

Part IV.  Community Health Financing Schemes ( CHFS )

CHFS is operational in 13 villages of Zugdidi district since 2000. It is formed on a basis of the collective pooling of resources for managing health risks.

15.	Are you a member of the CHFS? 

Yes_______                       No____________

16.	If yes, are you satisfied by the services provided under the scheme? (please circle)

1.  Not satisfied    
2.  Partially satisfied 
3.  Completely Satisfied
          
17.	If yes, where do you have the information about the scheme? (please circle)

1.	The Village doctor;
2.	Village nurse;
3.	The GSC;
4.	From kneeboards or other villagers;
5.	From the district policlinic;

18.	If no, what is the reason for this? (please circle)

1.	Absence of information;
2.	CHFS is not functioning in my village yet;
3.	Inability to pay premium;
4.	Lack of trust to the scheme;
5.	Other reason (please indicate)

Comments
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

THANK YOU FOR YOUR PARTICIPATION

Annex 2.        Health Care Financing in Georgia 

Central Budget

SISUF

PHD

Social Taxes 3%+ 1%

Municipal budgets

Local taxes

Taxes shared

State taxes

70 %

Special Providers

30 %

Transfers

10% of the Budget

 Regional Depts

Special Schemes

Special health providers, Ministry of Defence, Ministry of Internal Affairs.

Specialised programmes:
AIDS, STD, Malaria, etc

Basic
Benefits
Package

Public health, Sanitary supervision, selection for military serv. service

Private Insurance Comp.

Out of Pocket Payments

Contracted Health Providers

Community Health Schema
Community Health Schem.

Private Financing

Providers Without Contract 

Health Providers

Health Programs

Recipients of Public Funds

Budgets

Taxes

	

Annex 2

Annex 3
WHO Fair Financing Methodology
Description of Numerator and denominator 

The numerator
The numerator corresponds to total household health expenditure (HSh) which is the sum of prepayment and out of pocket payment to the health system. It can be simplified into the following formula:

(2)       

Prepayh 
There are 3 components to prepayment:

		(1)		(2)		(3)
1)The first component of prepayment (TGSHh ) , is the share of government spending on health at the national level multiplied by total government revenue from the household. This can be formalized in the following manner:
All the variables needed for computing the HFC were converted to a monthly figure. Where survey data is provided in other units (i.e. when the recall period is 7 days, 2 weeks, 3 months, 6 months, or one year) the data have been adjusted to monthly figures. If the survey was conducted over more than one month and the inflation rate is high over these months, all of the expenditures are deflated to a common month according to the Consumer Price Index (CPI).

The share of government spending on health is the ratio of total public spending on heath (PSHN) to total government spending (TGSN), both net of social security on health (SSHN). 

Total government revenue includes tax revenue and non tax revenue. Usually, only income tax (INCTAXh) and value-added tax (VATh) were available directly from the survey, although excise and property tax (otherh) were sometimes provided. The residual tax (such as corporate tax, import taxes or property tax if it is not available in the survey) and non-tax revenue were estimated form the tax information available in the survey. To reassign non-tax and other tax revenue back to the household, a scalar was applied and can be expressed in the following formula:

where summations are over households and,

The total survey GDP (GDPh) is estimated from the survey data using the survey weights. It is calculated as the weighted sum of all household expenditure over the share of total private consumption (PC) to GDP (country level data). When the household surveys did not provide the weights, the ratio of sample population to total population was used to inflate the survey expenditure to the country level. 

It is important to note that we assume that total household consumption is equivalent to total private consumption. Strictly speaking, this is not the case since private consumption is the market value of all goods and services purchased or received as income in kind, by households and non-profit institutions (NGOs). The latter part not being captured in the household survey, we may underestimate the total private consumption in country level if the non-profit institution component is large. 

Lastly, the calculation of total government spending on health incorporates all payments towards the financing of the health system through taxation, (mainly income tax, sales and value-added tax and other taxes). Estimating the various taxes is not a straightforward process and requires a more detailed discussion of how these were estimated.

Whenever income tax (INCTAXh) was not available directly from the survey in the form of a question, it was estimated from reported income from all sources including salaries and non-salary earnings (in-kind benefits) from all employment (including second job if relevant) and the countries tax schedule information. The calculation would account for whether the individual income was pre-tax or post-tax. In general, is based on gross income and the tax is marginal rate. The income tax paid by each individual was then aggregated to a monthly household level. 

The question arose as to which individuals are subject to income tax. We assumed that only the formal sector employees pay income tax. The way to identify formal sector workers would vary by country but usually the job classification questions would be indicative of whether an individual works in the private, public or informal sector. Other methods were can be used in more difficult cases.

Sales tax or VAT (VATh) and excise tax were easier to assign to the various categories of good and services spend by the household. It involved applying the corresponding tax rates according to the tax document. 

The information on other taxes (otherh), such as those paid on real estate, can often be obtained directly from the survey itself.  Otherwise, the value of the household property can be estimated from the questionnaire and the relevant tax rate available from the tax document could be applied. 

(2) The second component of prepayment is the total adjusted social health insurance premium of the household which can be formalized as follows: 

Household social health insurance premium (SSHh) was computed using the same assumption as for the income tax calculation. In other words, if social health insurance contribution was provided directly in the questionnaire in the form of a specific question on payments of premiums, the corresponding information was taken. When this was not the case, the contribution rate was applied to the salaries in the primary job of the individual (again, being careful to check whether the earnings were pre or post tax). The assumption is that only formal sector employees, or full-time permanent workers, pay for the social health insurance. The respective proportions were available from the tax documents or social security/social health insurance laws. 

Although the rates may vary depending on the level of income of the individual and the sector in which he works, the assumption here is that the employer’s contribution is born by the employee in the form of reduced salaries. For the computation, this implies that the employer’s contribution rate should be added to that of the employee. While this assumption is strong, it simplifies the analysis and the comparison across countries. 

It is important to stress that only the portion of social security contributions attributable to health is incorporated in the calculations. As with income tax, the social health insurance premium is assigned back to the household by summing over all individuals in the household who pay social health insurance premiums. 
 
The results for some surveys generated initial discrepancies between the value from survey data and National Health Accounts on social health insurance contribution. These discrepancies are essentially the result of under or over reporting of social security contribution in the survey data. In order to correct for this reporting bias of household’s, an adjustment is made with a scalar to make it more consistent with what is being reported at the national level. The scalar is the sum of survey level GDP times the share of social security on health at the national level, divided by the sum of social security on health at the household level. The scalar can be formalized as:

The third component of prepayment is the total private health insurance premium of household (PRVh). 

Household contribution to private health insurance was available in the household survey. In some countries employers also contribute to the private health insurance on behalf of their employees (the employer’s contribution to private health insurance was born by employee). In such cases we needed to include the employer’s contribution if the information was available. 

This is problematic in countries where private health insurance is the dominant form of health service financing and the employer subsidizes a share of the premium. If there is no hand on information, we would underestimate this component of prepayment. 

Likewise, to avoid introducing an upward bias in private health insurance premiums, refunds or credits granted from insurance company for not using the services in the previous period are deducted from households’ expenses on private health insurance premiums for the same period. 

OOPh
Total household health expenditure (HSh) includes all elements of prepay as detail above and net out of pocket spending on health (OOPh). Out of pocket payment includes all categories of health related expenses recorded at the time the household received the service. Typically these include doctor’s consultation fees, purchases of medication and hospital bills. Although spending on alternative and/or traditional medicine is included in the computation of out of pocket spending, expenditure on transport to receive health care services is excluded. To avoid introducing an upward bias in the health expenditure, all health cost reimbursements (eg from insurance companies) are deducted from total household gross out of pocket outlays for healthcare goods and services. 
			
The Denominator 
The denominator of the HFC index is a measure of the household’s capacity to pay defined as the permanent above subsistence income of the household. It is estimated as total household expenditure on goods and services (EXPh) and all adjusted tax disbursements not already integrated in total expenditure (aTaxh), minus the household’s total expenditure on food (Foodh).

(3)       

Exph
Total household expenditure (Exph) is the amount spent on all goods and services by the household, including in-kind spending and the consumption of household-made products. This information is available directly from the household survey and is aggregated to a monthly value.

aTaxh
The numerator also includes household’s adjusted tax payments used on health and its contribution to social security on health (aTaxh). This can be calculated using the following formula: 

From this formula, we can see that adjustments are needed for household tax payment and social security contributions. To avoid double counting VAT-Sales and excise tax which is already included in the reported expenditure, these values are multiply by the X scalar minus one (defined above). On the other hand, income tax and other relevant taxes not integrated in expenditure need to be adjusted with the X scalar for the same reasons as for the numerator. Likewise, social security on health has to be adjusted with the Y scalar. 

Foodh
Total food expenditure is the amount spent on all foodstuffs by the household including the family’s own food production. Food expenditure was computed by summing all the items deemed as basic necessity. This definition excludes expenditure on alcoholic beverages, tobacco, and eating outside of the household (restaurants). We suggest dropped any cases of households if the food expenditure is zero.
 
In sum, the health financing contribution of a household as defined above, is the ratio of total household spending on health to its permanent income above subsistence. To allow for comparisons of the fairness of financial contribution, the distribution of health financing contribution across households is summarized using by an index or score.