World Bank Health Nutrition and Population Policy Note Health Financing in Lebanon: Key Issues and Policy Options March 15, 2024 1 Contents Acronyms ..................................................................................................................................................... iii Acknowledgments ........................................................................................................................................ iv Executive Summary ....................................................................................................................................... 1 Introduction .................................................................................................................................................. 3 Lebanon’s fragmented health financing system ......................................................................................... 4 Four options to increase risk pooling and the coverage of a basic benefit package ................................. 5 1. A government-funded and managed scheme ................................................................................ 6 2. NSSF Social Health Insurance .......................................................................................................... 7 3. Multiple private health insurers with and without a risk-equalization mechanism .................... 9 4. A single private health insurer to cover a basic benefit package ................................................ 11 5. Which option to cover a basic health benefits package for Lebanon? ....................................... 12 Important health policy decisions to extend coverage to all ................................................................... 12 1. A basic health benefits package that is affordable within the budget ....................................... 13 2. Long-term financial commitment to provide a basic benefits package to the population ........ 14 3. Legislative and regulatory framework.......................................................................................... 18 Considerations for Lebanon ....................................................................................................................... 20 References .................................................................................................................................................. 22 Boxes Box 1: Typical Basic Health Benefits Package ............................................................................................. 14 Figures Figure 1: Health expenditures of payers as a percentage of total health expenditures, 2021 .................... 5 Figure 2: Transfers to SHI by Different Governments as a Percentage of All SHI Expenditures, 2019 ......... 8 Figure 3: A Multiple Insurance System with Risk Equalization transfers ...................................................... 9 Figure 4: Enrollment in Private Health Insurance in Lebanon .................................................................... 10 Figure 5: Enrollment by Private Health Insurer in Lebanon, 2021 .............................................................. 10 Figure 6: Basic Benefits Package ................................................................................................................. 13 Figure 7: From Supply-side to Demand-side Financing for Low-Income Groups ....................................... 15 Figure 8: Setting Premiums for the Basic Benefits Package Per Enrollee Per Year .................................... 16 Figure 9: Premium Revenue Spent on Basic Benefit Package and Administrative Costs, in $US million per year ............................................................................................................................................................. 17 Tables Table 1: Premium Revenue Scenarios, in US$ million, per year ................................................................. 16 ii Acronyms ESSN Emergency Social Safety Net FMIS Financial Management Information Systems ICC Insurance Control Commission IT Information Technology MOPH Ministry of Public Health NGO Non-Governmental Organization NHS National Health Service Latvia NSSF National Social Security Fund OOP Out-of-Pocket PFM Public Financial Management PHC Primary Health Care SHI Social Health Insurance THE Total Health Expenditures TPA Third Party Administrators UCS Universal Coverage Scheme Thailand WHO World Health Organization iii Acknowledgments This policy note was prepared by World Bank staff including Pia Schneider and Ronald Gomez Suarez. Angela Hawkins and Cynthia Yammine provided administrative and organizational support. Fiona Mackintosh was the editor. Michele Gragnolati provided management oversight. Valuable feedback was received from Son Nam Nguyen, Dina Abu-Ghaida, Farah Asfahani, and Rim Atoui. The note was prepared under the overall guidance of MENA Regional Director for Human Development Fadia M. Saadah and Country Director Jean-Christophe Carret and was sponsored by the World Bank Country Unit in Beirut. The authors wish to thank peer reviewers Agnes Couffinhal and Moritz Piatti-Fuenfkirchen. The team is grateful for the guidance and time offered by his Excellency Firas Abiad the Minister of Health of Lebanon and by representatives from the Lebanese government who provided helpful comments on the concepts and preliminary findings of this study during several meetings. iv Executive Summary Lebanon’s healthcare system faces some daunting challenges. The country’s ongoing socioeconomic and political crisis has led to reduced government health spending and the widespread loss of public and private health insurance coverage among the population due to job losses. This resulted in higher medical bills and lower health service use for patients. The poor have been hit hardest as they are rarely able to afford the high fees charged by healthcare providers. With fewer resources, hospitals have reduced their operational capacities, which has prompted health workers to take up job opportunities in other countries. Because Lebanon’s health system is characterized by fragmentation of both payers and providers, different benefits and prices, and high administrative costs, it has been caught unprepared for this crisis. The government aims to address this situation through reforms with the goal of ensuring access to health care for all by pooling the population’s health risks in a financially sustainable health system. There are four ways in which Lebanon could reform its health system to achieve this objective: (i) a government- funded system; (ii) social health insurance; (iii) multiple private health insurance; or (iv) a single private health insurance fund. It might also be possible to combine some of these options within the chosen system. However, it will take some time for a political decision to be made to adopt one or more of these options. What can be done in the meantime is to focus on the key aspects that would be common to all four options, namely, defining a basic benefits package that is affordable to the payers, securing longer- term financial commitments from the payers, and creating a strong legislative and regulatory framework for the health sector. The analysis presented in this policy note shows that, regardless of which option will be chosen, the government can already strengthen the performance of the current health financing system by taking the following measures. Lebanon’s health system will require predictable funding and strong institutional and organizational capacity to operate effectively. Regular budget forecasting will be needed to enable the MOPH to prepare credible budgets for the health sector as a whole and specifically for the provision of a basic benefits package. The government’s arrears to suppliers will need to be cleared. Standards for IT investments and for data collection, reporting, and analysis can be introduced for all health stakeholders. Legislation and regulations will be required to govern the public and private health insurance markets to ensure their adherence to international standards. Taken together, these reforms would help to stabilize the financing for health and support the efficient use of health resources throughout the system. To design the basic health benefits package, a technical commission could be established to develop a prioritized list of medical conditions and treatments based on standard treatment protocols. Actuarial analysis would identify what items on the list could be included in the basic package given the available budget. The financial implications of the basic benefits package for all payers, including the government, health insurers, employers, and individuals, would need to be analyzed with the understanding that enrollment must be mandatory for all to achieve universal coverage. An affordable contribution payment would be set for all individuals, independent of their age or health status. The government and non- governmental organizations with the support of development partners would pay the contribution on behalf of low-income groups. On the expenditure side, the goal would be to maximize the amount of revenue from contributions spent on health care and to minimize administrative costs. 1 The Lebanese government is currently drafting a law to introduce universal health coverage. This law can provide the framework for sustainable and efficient health financing and pooling and set the rules for the development of a basic health benefits package. It can also guide the relations between payers, providers, and consumers. The Ministry of Public Health will play an important oversight and stewardship role in the implementation of the law and in the preparation of related policies and regulations. 2 Introduction While some important health reforms have been introduced in Lebanon, the country’s socioeconomic and political crisis has created major setbacks for health financing. The health reforms currently being introduced relate to provider payments, health sector digitalization,1 cost containment, and the modernization of health care provision. The government is also drafting a law on universal health coverage (UHC) that aims to secure access for the whole population to essential health care. However, since 2018, Lebanon’s GDP has declined by more than 40 percent, while inflation reached 264 percent in 2022, and the economy is being dollarized. Government revenues dropped to 6 percent of GDP in 2022, and the government’s budget deficit increased to more than 5 percent of GDP.2 With the onset of the current regional conflict, Lebanon’s economy is projected to contract between -0.6 to -0.9 percent in 2023.3 This has had affected public trust in government4 and health spending. The crisis is having a detrimental impact on health. By 2021, government spending on health care in the public sector had declined to 0.45 percent of GDP or US$17 per capita.5 This was far below the US$86 per capita that is recommended by the World Health Organization (WHO) as the minimum expenditure needed to provide basic health services in low- and middle-income countries. Many people have lost their health insurance coverage along with their job. With fewer enrollees, insurers have tried to compensate for these losses by raising their premiums and reducing the services that they cover, which has meant that many Lebanese are facing higher medical bills or are having to reduce their service use. The simultaneous decline in the revenues of both the government and insurers is challenging for health providers, who are charging higher fees to patients and trying to raise additional funds from local NGOs and diaspora- financed endowments to continue their operations. Despite these efforts, many hospitals operate at reduced capacity, and many health workers are leaving Lebanon to take up jobs in other countries.6 The poor are most affected. Preliminary data from the 2022-2023 Lebanon Household Survey (LHS) suggest that around three out of five households consider themselves to be poor or very poor.7 Households who do not receive any private remittances are more likely than others to feel impoverished and thus have less money to pay for health care. As a result, when the poor become ill, they are unlikely to be able to afford to pay the higher fees being charged by providers and are therefore likely to have to forego care and resort to self-medication. The government aims to address this situation by increasing access to health care by pooling the population’s health risk in a financially sustainable health system. Lebanon’s health financing policy has evolved incrementally. While policy discussions have focused on provider payment reforms, the legislative and regulatory framework does not provide the necessary underpinning to ensure the efficient pooling of the population’s health risk and sustainable financing for health care. To address this situation, the Parliamentary Health Commission in collaboration with the government has been working on a draft UHC law. 1 MOPH (2023). 2 IMF (2023). 3 World Bank (2023a). 4 Arab Barometer (2022). 5 MOPH and WHO (2023). 6 El-Jardali et al (2023); and MOPH and WHO (2023). 7 World Bank (2023b). 3 This policy note is being produced as a timely input into the political discussions on the draft UHC law, its associated regulations, and the National Health Financing Strategy. Specifically, it presents health financing options and reforms aimed at achieving universal coverage of a basic benefits package. The goal is to create a health financing system that pools the health risks faced by the population and decreases out-of-pocket payments for individuals, is financially sustainable and efficient, and ensures equity in financing and in access to an essential benefits package. Lebanon has four options for risk pooling: (i) a government-funded system; (ii) social health insurance; (iii) multiple private health insurance; or (iv) a single private health insurance system. However, it will take time before a political decision can be made to adopt one or more of these options. What can be done in the meantime is to focus on the key aspects that would be common to all options, namely, defining a basic benefits package that is affordable to the payers, securing longer-term financial commitments, and creating a strong legislative and regulatory framework for the health sector. Lebanon’s fragmented health financing system Lebanon’s health sector has many payers, who pool funds for different population sub-groups and reimburse providers for their services. The main payers for health care are patients, NGOs, the government, the National Social Security Fund (NSSF), and private insurers who provide voluntary coverage (Figure 1). Patients’ out-of-pocket (OOP) payments for care not covered by insurance or the government constitute 28 percent of total health expenditures (THE). In 2021, almost 60 percent of these OOP payments were made for pharmaceuticals. NGOs give direct financial support to providers. The government through the Ministry of Public Health (MOPH) is a relatively small payer, mainly covering the costs of health care provided to uninsured poor individuals in public hospitals. Its share of THE as of 2021 (6 percent) is less than the 8 percent accounted for by other government entities (such as the Army, the Internal Security Forces, the Civil Servants Fund, and the Public Mutual Fund) who all finance care for public employees and their families.8 The NSSF, which provides health insurance to formal sector workers, declined from 26 percent of THE in 2019 to 10 percent in 2021. Voluntary health insurers account for 6 percent of THE, mainly to insure upper-income individuals (Figure 1). In addition, prior to the crisis the Lebanese National Bank spent about US$200 million annually to finance the import of pharmaceuticals.9 Lebanon’s health financing system is highly fragmented. Fragmented pooling by many different payers has resulted in different enrollment fees for individuals, high administrative costs, and inequity in access to care for patients. In the absence of a standard health benefits package, payers provide different coverage for their populations, and providers charge patients different copayments. The resulting high OOP payments can be reduced by bringing more people into a risk pool where all participants would share the financial risk related to ill health and by defining a standard health benefits package that would apply to all. This would require a strong regulatory framework that would ensure that pooling is efficient, that financing is sustainable, and access to a basic package of services would be available to all. 8 MOPH and WHO (2023). 9 World Bank (2022). 4 Figure 1: Health expenditures of payers as a percentage of total health expenditures, 2021 Mutuelle des Mutual Funds Public Internal Security Forces State Security Forces Fonctionnaires de 1% 1% 0% General Security Forces L'Etat Army Customs Private 0% 3% 3% 0% Insurances 6% Ministry of Public Health Households 6% 28% National Social Security Fund 10% Mutual Funds Private Non-Governmental 15% Organizations 27% Source: WHO (2023) and Lebanon National Health Accounts for 2021. Before more people can be brought into a risk pool, policymakers will need to decide how to pool, what benefits to cover, how to finance the pool, and what regulations would be needed. Lebanon does not yet have a standard health benefits package that is offered by both the government and insurers. Nor are there any regulations governing risk pooling, fund management, or the allocation of health monies among providers. No financing strategy exists to identify the different payers or to estimate how much they could sustainably afford to finance the provision of a basic benefits package. Similarly, the relationship between the current payers – including the government, the NSSF, private insurers and NGOs – and providers is not regulated, nor is there any consumer protection regulation in the current system. Efficient pooling will depend on seven principles: (i) experienced management with checks and balances following international best practice; (ii) low administrative costs to enable more to be spent on medical care; (iii) the realization of the benefits of technology and scale economies; (iv) a financially affordable and sustainable plan for the long term; (v) equity in financing and in access to basic health coverage; (vi) the maintenance of targeted levels of service satisfaction for all customers, providers, beneficiaries, employers, and employees; and (vii) government competence to monitor and evaluate the performance of the system and the achievement of objectives. Each of the four pooling options discussed in the following section will have to incorporate all seven of these factors to be financially sustainable. Four options to increase risk pooling and the coverage of a basic benefit package Lebanon has four potential options for extending risk pooling and reducing the payments made by patients. The four options are based on the current risk pooling system in Lebanon and involve pooling and purchasing health care through: (i) a government-funded and managed scheme: (ii) the NSSF public health insurance program; (iii) multiple private health insurers; or (iv) a single private health insurance scheme. In each option, payers pool health funds on behalf of the population and purchase care from providers to ensure that the population has access to a standard basic benefits package. To achieve universal coverage, coverage would have to be mandatory, and nobody could be excluded. 5 1. A government-funded and managed scheme A government scheme would be fully funded and managed by a public entity in the central or local government and financed from government revenues. This entity would contract with public and private providers to deliver a basic benefits package for the covered population. The scheme could be population- based or only for sub-groups. Participation would be automatic, and individuals would not have to actively enroll as they would be automatically eligible. Examples of such schemes include the National Health Service (NHS) in Latvia, which is a population- based government scheme for all residents supervised by the Ministry of Health10 and the Universal Coverage Scheme (UCS) in Thailand, which is only for low-income groups that are not covered by any other health insurance.11 In Latvia, the annual budget allocation to the NHS is defined during the government budget process and in 2020 amounted to 4.7 percent of GDP. However, previous budget allocations had been insufficient to finance a comprehensive benefits package, which resulted in long waiting lists and high out-of-pocket payments amounting to 2.4 percent of GDP. In Thailand, a law defines the annual budget for the UCS based on a fixed per capita amount and on the number of individuals covered. The average per capita amount is calculated based on the unit cost of services and the average quantity of services provided within the benefits package. Lebanon already has a small government scheme managed by the MOPH. The MOPH spends about 66 percent of its budget on providing a few services to the uninsured in public hospitals, 18 percent on pharmaceuticals, and about 9 precent on primary health care (PHC).12 However, government spending on health has been fluctuating, which has resulted in substantial delays in the release of government transfers to health providers, who have had to resort to arrears financing and to charging higher fees to patients. With insufficient revenue, hospitals have had to adjust their operations, close hospital wards, and reduce their salaried health staff. The unpredictability of government funding and weak financial management are major challenges for Lebanon’s government scheme. Government revenues dropped to 6 percent of GDP in 2022, which has limited its ability to finance all sectors. As a result, government spending on health declined from 2.3 percent of GDP in 2019 to 0.45 percent of GDP in 2021 (or US$17 per capita). Furthermore, the health budget execution rate has been very low at only 40 percent, which points to weaknesses in public financial management and in the budget process. Implementing a successful government scheme will require predictable funding and strong institutional and organizational capacity at the MOPH. The first requirement in developing a government scheme would be to define the budget that would be needed to finance the provision of an essential health benefits package to all participants. The MOPH could follow a similar approach as that taken in Thailand and define the annual budget for the scheme based on a fixed per capita amount and on the number of individuals to be covered. The budget would then define the size of the benefits package. If more funding were to be available, then the benefits package could cover more medical conditions and treatments. Lebanon’s policymakers would have to decide whether all residents would have access to this benefits package as in Latvia or only a sub-group as in Thailand. Setting up the scheme as a public entity would 10 European Observatory on Health Systems and Policies (2022). 11 Tangcharoensathien et al (2020). 12 MOPH and WHO (2023). 6 require substantial institutional and organizational capacity building within the government to ensure the efficient resource management, contracting, and payment of providers. Public financial management (PFM) reforms are needed in the health sector to ensure that the government’s health budget is fully spent every year and that it makes timely transfers to providers. All government health expenditures should be subject to internal commitment and budget controls, all transfers to providers and suppliers need to be executed in a timely manner and at the budgeted level, and the health outputs produced in return for budget transfers should be tracked. Any government arrears to suppliers will need to be managed and cleared. Regular budget forecasting will enable both the MOPH and providers to prepare credible budgets for the provision of the basic benefits package. In Lebanon’s current fiscal and financial management context, a government scheme is not a viable option. Due to limited public funding and weak financial management, the government is currently not equipped to pool the risks of a larger population group and to finance, manage, and ensure equitable access to an essential health benefits package. Furthermore, substantial institutional and organizational capacity building would be needed to set up a government scheme that manages funds efficiently, and transfers payments on time to providers. 2. NSSF Social Health Insurance The second option would involve the NSSF public health insurer providing coverage of a basic benefits package to the whole population. The NSSF in Lebanon is a social health insurance (SHI) scheme with mandatory enrollment for formal sector workers. It is financed by enrollees’ and employers’ contributions and from the government’s general revenues. The funds are administered by the NSSF, which is a public (off-budget) entity that contracts with public and private providers to deliver a care for the covered population. Several countries have SHI that covers the entire population. In these countries, one public health insurer provides coverage for the basic benefits package for all residents. These SHI were traditionally financed by contributions from formal sector workers and employers, but they increasingly receive mixed funding. In some countries, the SHI may receive transfers from government revenues to finance the coverage of non-working population groups, and their annual deficit may also be covered by the government. The percentage of government transfers to SHI funds varies from country to country. Hungary has one of the highest shares, as 65 percent of health insurance expenditures in 2019 came from government general revenues (Figure 2). These government transfers are particularly important in countries with aging populations, shrinking working-age populations, and large informal sector economies. 7 Figure 2: Transfers to SHI by Different Governments as a Percentage of All SHI Expenditures, 2019 Slovenia 5.1 Bosnia 11.7 Estonia 13.2 Croatia 13.9 Romania 21.0 R. North Macedonia 21.4 Czech Republic 21.8 Slovakia 24.4 Turkiye 30.6 Bulgaria 35.8 Hungary 64.8 0 10 20 30 40 50 60 70 Source: OECD Health Statistics 2023 and World Bank Public Expenditure Reviews In Lebanon, the NSSF provides health insurance coverage to formal sector workers, their families, and pensioners. In 2021, employees in Lebanon paid 8 percent of their gross wage and employers another 3 percent as health insurance contributions to the NSSF. However, the NSSF has been in financial distress since 2001 due to declining revenues and weak management. NSSF revenues from payroll contributions have declined because of lower insurance enrollments and high contribution evasion as salaries are increasingly paid in US dollars but are not fully taxed. Combined with insufficient insurance regulation and weak management, the NSSF faces major solvency issues as evidenced by its substantial long-term liabilities to hospitals (US$19.8 million) and to outpatient providers (US$76.6 million). Recent assessments found that the NSSF does not follow international financial reporting standards, its last audit report was conducted in 2010, and the NSSF Board is no longer functioning.13 Effective health insurance coverage for a large population will need to be managed by a high functioning health insurance organization. As in other countries, Lebanon could use the NSSF public health insurer to provide health coverage for its entire population. Also as in other countries, the contributions for the elderly, informal sector workers and the poor would need to be paid to the NSSF by the government, development partners, or NGOs. In addition, any resident could enroll in the NSSF scheme and pay a premium to access the basic health benefits package. However, given the current weak management of the NSSF, it is highly unlikely that the government, NGOs, and development partners would be prepared to entrust it with such large amounts of money. The NSSF would have to go through a substantial organizational, financial, and management overhaul to become a trustworthy fund manager for the whole population. A way would need to be found to clear the NSSF’s liabilities and payment arrears to hospitals and to outpatient providers. The NSSF would have to invest in IT systems and experienced management and staff to enroll the population, contract, and pay 13 ILO (2023); Merhej and Chehayeb (2022). 8 providers, provide coverage for an affordable health benefits package, and conduct regular analysis of insurance data. The country’s oversight arrangements, legislation, and regulations governing health insurance would need to be revisited to ensure that the NSSF complies with international standards of efficient financial and organizational management. 3. Multiple private health insurers with and without a risk-equalization mechanism A third option would be to allow multiple private health insurers to offer coverage of the standard health benefits package. This kind of system exists in several European countries, including the Netherlands and Switzerland, where enrollment is mandatory for all residents, and insurers cannot exclude individuals from enrolling in the basic benefits package. In this system, everybody pays the same premium for the basic package, regardless of age or health status. In a multiple insurer system, some health insurers will end up with proportionally more individuals who are very ill than other insurers. Insurers with a larger number of sicker enrollees are high-risk pools. They will have to cover Figure 3: A Multiple Insurance System with Risk Equalization transfers higher than average medical bills, which could endanger their financial situation. To prevent insurers from enrolling mainly healthy individuals to keep their costs low, countries use complex risk-equalization mechanisms to require insurers with healthier enrollees (low-risk pools) to transfer funds to insurers with sicker and costlier enrollees (high-risk pools) (Figure 3). The government calculates these annual transfer payments for all insurers based on their enrollees’ age, gender, geographic area, past and current medical diagnoses, past spending, and other characteristics. This is why multiple insurance systems are complex, requiring a wealth of data and tight oversight and regulation.14 South Africa has a multiple insurance system that provides voluntary coverage with no risk equalization transfers. More than 100 medical schemes offer voluntary health insurance coverage to the population. South Africa’s medical schemes are private not-for-profit entities and are regulated under the Medical Schemes Act. The benefits offered by these schemes vary as there is no standard benefits package, and they mainly cover care in the private sector. Premiums vary too and are higher for sicker individuals. This makes enrollment unaffordable for lower-income groups and for sicker people. As a result, only 16 percent of the population have enrolled. With no risk-equalization transfers, South Africa’s multiple insurance system has led to fragmented pooling and unequal health financing and access. The scheme mainly benefits wealthier individuals and private sector providers.15 Lebanon currently has the same voluntary health insurance system as South Africa despite its major disadvantages. Private insurers provide voluntary coverage for different medical conditions and charge sicker individuals higher premiums. As of 2021, there were 38 private insurers in Lebanon who financed only 6 percent of total health expenditures (Figure 1). Only 12 percent of the population, roughly 655,000 14 World Bank (2009). 15 Columbia University (2023). 9 people, could afford to enroll with private insurers (Figure 4), even fewer than in South Africa. The three largest insurers (Medgulf, Allianz, and GroupMed) covered about 36 percent of the privately insured population.16 This means that all 38 insurers have on average only about 17,000 enrollees each and charge high premiums to cover their costs (Figure 5). Insurers with fewer and sicker enrollees charge higher premium. Health insurers use third party administrators (TPA) to manage their health insurance business, but the efficiency of these arrangements has not been analyzed. The government does not regulate the enrollment rules, premium levels, the benefits package, or financial management of health insurers. Because private insurers in Lebanon have so few enrollees, their administrative costs are very high. In 2021, they spent on average only 53 percent of their premium revenues on their members’ health care, with insurance profits and administrative costs accounting for the remaining 47 percent. This is considerably more than in Switzerland where the 44 private health insurers spend on an average of only 5 percent of their premium revenue on administrative costs to cover the basic benefits package. Under the Affordable Care Act in the United States, health insurers must spend at least 80 percent of their premium revenues on health care, and insurers with administrative costs of more than 20 percent must issue premium rebates to their members.17 Insurers’ administrative costs are not regulated in Lebanon. Figure 4: Enrollment in Private Health Figure 5: Enrollment by Private Health Insurer Insurance in Lebanon in Lebanon, 2021 Source: ICC (2021). Countries with multiple private health insurers usually have comprehensive legislation and regulations to manage these complex systems. Health insurance regulation is crucial for ensuring the financial solvency of insurers, promoting risk spreading, protecting consumers against fraud, and ensuring that they receive the benefits that they have been promised. In Lebanon, the Insurance Control Commission (ICC), an independent institution under the Ministry of Economy and Trade, is responsible for the licensing and financial regulation and supervision of all insurers.18 However, there is no regulation of the technical and market conduct of health insurance or of insurers’ relationship with their enrollees and providers. Before Lebanon would be able to launch a multiple health insurance system with a risk-equalization transfer, the government would have to substantially reform its health insurance regulations, oversight arrangements, data collection efforts, and financial management systems. Detailed data and analysis as 16 ICC (2020 and 2021). 17 https://www.cms.gov/marketplace/private-health-insurance/medical-loss-ratio 18 http://www.insurancecommission.gov.lb/about-icc/ 10 well as more government capacity would be needed to set up a risk-equalization system to transfer payments from insurers with lower-risk pools to those with higher-risk pools as is the case in other countries with multiple insurers. However, the political feasibility of implementing such a transfer system in Lebanon is questionable. Health insurance legislation and regulation would be needed to ensure that insurers spend their premium revenues on health care. Regulations would also be needed to govern the content of the standard benefits package, the setting of premiums, enrollment requirements, and insurers’ financial management, contracting, and relationships with providers and consumers. It is highly unlikely that all private insurers in Lebanon have the capacity to make the necessary investments to offer coverage of a standard basic benefits package to a large risk pool in a multiple insurance system. 4. A single private health insurer to cover a basic benefit package The fourth option is to introduce a system in which one private health insurer enrolls all residents and provides coverage for the basic benefits package. Under this option, the insurer would be private, unlike in the second option when the insurer would be the public sector NSSF. The government would define and regulate a “standard health coverage policy� including on premium levels, geographic areas, the basic benefits package, rules governing the insurer’s financial management and contracts with providers, and consumer protection. Private health insurers could compete to be chosen as the insurer to offer this health insurance coverage to the insured population. Given the high upfront investments needed, the insurer would need to make a commitment to provide the insurance for at least three years. A few countries have only one private health insurer that offers the basic benefits package nationwide or within a given region. In the United States, the basic benefits package for insured individuals is managed by private health insurers under the supervision of the federal and state governments. Small states such as Vermont and Delaware usually have only one or two private insurers.19 In states with more than one insurer, the largest insurer usually covers most of the insured. This single insurer can either be private not-for-profit or private for profit. In Switzerland, private insurers offering the basic benefits package must be not-for-profit, which is not the case in the United States. Compared to a multiple insurance system, a single insurer system does not require any risk adjustment transfers between different insurers. The insurer can also reap economies of scale from spreading the financial risk across a large risk pool, which keeps administrative costs low. In Lebanon, the single private insurer would offer the standard basic benefits package, while all services excluded from the package could be covered by voluntary private health insurance. A strong legislative and regulatory framework would be needed to ensure the effectiveness of a single insurer system. If Lebanon were to decide to opt for a single private health insurance to cover the basic benefits package, the following laws and regulations would be needed: (i) enrollment could be either voluntary or mandatory for all or for subgroups; (ii) nobody could be excluded from enrolling in the basic benefits package; (iii) everybody would pay the same premium for the basic package, regardless of age or health status; (iv) premiums for low-income groups would be subsidized by the government, NGOs, and development partners; (v) the insurer would be required to offer a basic benefits package that is affordable for premium payers; (vi) existing private health insurers would continue to be entitled to offer 19 https://www.kff.org/other/state-indicator/number-of-issuers-participating-in-the-individual-health-insurance- marketplace/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D 11 voluntary additional coverage for services excluded from the basic package; and (vii) the organizational and legal form of the private insurer would need to be regulated. The Lebanese health insurance law would have to define these rules in detail. The government could contract with a single health insurer to offer the basic benefits package in Lebanon. This would mean that the government would invite international private health insurers to compete for the contract, which would be in accordance with the country’s new Competition Law (March 2022). Contracting with a reputable international insurer would be crucial because of the need for high investment cost in insurance operations and information systems. The duration of the initial contract should be at least three to five years. The contract would define the risk for all sides and related risk- mitigation measures. Over time, the contract would need to be updated to take account of any changes in, for example, the government’s fiscal situation, consumer demand for health services, or the introduction of new laws and regulations. 5. Which option to cover a basic health benefits package for Lebanon? As discussed above, Lebanon already has a small government scheme that pays for limited care for the uninsured, as well as the NSSF for formal sector workers, and a multiple voluntary health insurance system with no risk equalization transfers. However, none of these schemes meets the principles of effective pooling. They are not managed with checks and balances following international best practice. They spend relatively little on medical care because of their high administrative costs. The fragmentation of the system means not only that the benefits of technology and scale economies cannot be realized but also the system is not financially affordable and sustainable in the long run and leads to inequity in financing and in access to basic health coverage. Satisfaction with the systems is likely to be low for customers,20 providers, employers, and employees. Also, the government does not have enough capacity to monitor and evaluate the performance of insurers or providers. Finally, there is no legislative and regulatory framework to set the rules for efficient behavior by payers and providers. Regardless of which option will be chosen, the government can already take steps to strengthen the performance of the current health financing system. This would include strengthening the PFM system at the MOPH. Regular budget forecasting will be needed to enable both the MOPH and providers to prepare credible budgets for the provision of the basic benefits package. The government should require the NSSF to adhere to international public insurance management practices, invest in IT systems and management, contract and pay providers on time, and conduct regular analysis of insurance data, while a strategy will need to be found to clear the NSSF’s liabilities and payment arrears to providers. Also, the government could introduce standards for IT investments and data collection, reporting, and analysis to apply to all stakeholders in the health sector. Important health policy decisions to extend coverage to all Under all four options, important steps would have to be taken to establish an effective health financing system for Lebanon. An essential basic benefits package would have to be defined, long-term financial commitment would need to be ensured to finance the package, and a legislative and regulatory framework would have to be put in place that sets the rules for efficient resource management and 20 Kalife et al (2023). 12 allocation. The current ongoing dialogue in Parliament about the UHC law provides an opportunity to discuss how best to implement these steps. 1. A basic health benefits package that is affordable within the budget The government would have to start by defining Figure 6: Basic Benefits Package a basic benefits package (BBP) that can be financed within the available budget. If it is decided that the basic package should cover more services, then the budget would have to be increased. No country has enough money to pay for everything. Therefore, anything that cannot be included in the BBP could be offered by private health insurers through additional voluntary coverage. However, because premiums are so high, it is usually only the wealthy who can afford to buy additional voluntary coverage from private insurers. It is likely that some services would not be covered by any insurance, in which case people would need to pay out of pocket for those services (Figure 6 and Box 1). Clinical protocols and treatment pathways for different medical conditions provide the foundations to develop the basic benefits package. The MOPH in collaboration with providers and the World Health Organization would first have to agree on the standard treatment protocols and the clinical pathways for treating the main diseases prevailing in Lebanon’s health sector. Based on the experience of other countries, Lebanon’s list would likely include more than 600 pairs of diagnoses and associated treatments. However, there will not be enough resources to pay for everything, and prioritization is needed. Putting together a basic benefit package would require prioritizing the diagnoses and treatments that are most important to optimize the population’s health within the available budget. Explicit criteria should be set for prioritizing diagnoses and treatment pairs. In countries that already offer a basic benefit package, these criteria have included: (i) the benefit of the treatment for patients compared to the absence of treatment; (ii) the impact on the patient’s suffering and on that of others caring for them; (iii) the population effect (for example, the public health costs of the spread of tuberculosis); (iv) effectiveness of a treatment for a given disease; and (v) the cost of treatments. Countries have appointed technical commissions to manage the prioritized list of medical conditions. For example, in the US state of Oregon, the Health Evidence Review Commission includes 13 appointed volunteer members who are responsible for updating the list of diagnoses and treatment pairs. Among them are six physicians, a dentist, a public health nurse, a behavioral health provider, a complementary medicine provider, a pharmacist, and two consumers. The Commission conducts a complete review of the list every two years and makes interim modifications twice a year. To ensure a transparent process, all 13 meetings of the Commission and its subcommittees and advisory panels are open to the public. In addition, community meetings are held to elicit public input into the prioritization process.21 The basic benefits package consists of those priority diseases and treatment that can be covered by the budget. Actuarial analysis would need to be undertaken to estimate the cost of treating the diseases on the prioritized list, and the results compared against the available budget. The results of the actuarial analysis would also be used to set an average premium for all enrollees. To conduct this analysis, the Lebanese health sector would need to upgrade its data and analysis and ensure that common diagnosis and treatment procedure codes are used in all health facilities. Regular follow-up analysis would also be needed to update the package regularly. Box 1: Typical Basic Health Benefits Package In most countries, depending on the available budget, the basic benefits package covers: • Maternity, reproductive health, and newborn and child health care. • Disease prevention (immunization, screenings, and well-child health). • Chronic disease management (diabetes, asthma, hypertension, and psychiatric care). • Comfort care including palliative care, hospice care, and pain management. • Treatment to cure fatal conditions (appendectomy, treatable cancers, and dialysis). • All primary health care. • All diagnostic services such as laboratory tests and imaging services. Not all services can be covered. Countries usually exclude certain services from the basic benefits package such as treatments for conditions that will resolve on their own whether treated or not (such as diaper rash, acute conjunctivitis, and acute pharyngitis), infertility treatment, and care that has little or no impact on health status. Individuals can enroll with private voluntary health insurers for this additional coverage if needed. The benefits package is usually updated regularly as new medical technology becomes available, illnesses evolve, and the available financing changes. Lebanon could follow the lead of other countries and establish a steering committee and technical commission to develop the prioritized list of medical conditions and treatments. Given that the criteria to prioritize diagnoses and treatment are similar across countries, Lebanon’s technical commission could use a prioritized list from elsewhere, such as Oregon,22 and adjust it to the Lebanese context. Because the benefits package should be updated regularly, it should not be defined in the UHC law. 2. Long-term financial commitment to provide a basic benefits package to the population The budget to finance the basic benefits package would be funded by revenue from premiums, taxes, and other contributions. Revenue from premiums would be paid by individuals during enrollment. To maximize premium revenue, enrollment could be made mandatory for all residents with everybody paying the same premium for the basic package, regardless of age, health status, or salary. Similar as in other countries, the government could allocate an amount from its tax revenue to subsidize premiums for 21 https://www.oregon.gov/oha/hpa/dsi-herc/pages/index.aspx 22 https://www.oregon.gov/oha/HPA/DSI-HERC/PrioritizedList/1-1- 2024%20Prioritized%20List%20of%20Health%20Services.pdf 14 lower-income individuals, with the support from NGOs and development partners. The total premium revenues from all enrollees would constitute the budget available to finance the basic benefits package. The fiscal situation in Lebanon will make it difficult for the government to finance the premiums of low- income groups. In 2021, the country’s tax-to-GDP ratio dropped to 5 percent. Government spending on health through the MOPH budget fluctuated between 2.7 percent of general government expenditures in 2019 and 4.6 percent in 2021. Therefore, a budget-neutral solution will be needed to subsidize premiums for the poor based on historical government health spending and adjusted to the fiscal context. In the future, the government could set a cap of 5 percent of general government expenditures to finance premiums for low-income groups. Based on 2021 spending, this would amount to about 900 billion LBP per year or US$60 million for premium subsidies. One budget-neutral solution to funding these subsidies might involve reallocating the 74 percent of the MOPH budget spent on 27 public and 135 private hospitals to subsidize the enrollment of poor individuals (Figure 7). For health providers, it would result in a shift from supply-side to demand-side government financing for health care. This means, the payer who enrolls the poor will reimburse providers for the basic benefits package delivered to the poor. Figure 7: From Supply-side to Demand-side Financing for Low-Income Groups MoPH Expenditures in 2022 Salaries, MoPH Demand Financing, future Other compensat Salaries, 3% Other ions (for… compensati 3% on… Stationary, Hospitalization supplies, fuel, (private and public hospitals) Transfer to pay medicines, automatic water, 74% enrollment electricity, telecommuni 95% 27 public and 136 private hospitals cation, others 21% The government’s PFM system would need to be updated to ensure that it could make timely transfers of the premium subsidies to the payer on behalf of the poor. This would mean that the subsidy payments would be subject to internal commitment and budget controls and that all government transfers to the payer would have to be executed in a timely manner and at the budgeted level. Also, regular analysis would be needed on the impacts on population health produced in return for the premium subsidies. The premium would be set based on insurance actuarial analysis. During the first year, with only limited data available, the actuary would set the premium at a rate that would be affordable for most Lebanese. For example, the actuary might set the annual premium at US$100 per enrollee per year, which would amount to 3 percent of Lebanon’s GDP per capita as of 2023 (Figure 8). This would be less than the country’s per capita THE of US$120 per year in 2021 and of US$750 in 2019. It would also be about a quarter of the annual cash transfer amount of US$390 paid to beneficiaries of the Emergency Social Safety Net (ESSN), a World Bank-funded project that provides cash transfers and access to social services to 15 extremely poor and vulnerable Lebanese populations.23 During the following year, as more data became available, the premium could be adjusted based on an actuarial analysis that could take into account actual data on enrollees’ health status, use of health services and of the benefits package in particular. Figure 8: Setting Premiums for the Basic Benefits Package Per Enrollee Per Year $800 $750 $700 $600 $500 $390 $400 $300 $200 $100 $120 $133 $100 $- 3% of GDP p/c THE per capita 4% of GDP p/c ESSN cash THE per capita in 2023 in 2021 in 2023 transfer per in 2019 person per year Note: THE = total health expenditures, ESSN = social safety net for the poor. Different premium revenue scenarios can be estimated using different assumptions. The three scenarios presented in Table 1 assume an increase in the annual premium ranging from US$133 to US$500 to US$1,000 per enrollee per year based on the comparisons shown in Figure 8. The premium is the same for each person enrolled in each scenario. The number of self-paying individuals and government employees increases across scenarios, assuming that a well-performing system will attract more members who can finance their enrollment from remittances paid by their families and will attract more workers whose enrollment is sponsored by their employers. Table 1: Premium Revenue Scenarios, in US$ million, per year Scenario 1: Scenario 2: Scenario 3: Premium: $133 per person Premium: $500 per person Premium: $1,000 per person (LBP 2 million) (LBP 7.5 million) (LBP 15 million) Enrollees Premium Premium Premium Number revenue in Number revenue in Number revenue in million US$ million US$ million US$ Premium-paying enrollees per year Individuals 600,000 $ 79.80 800,000 $400.00 1,000,000 $ 1,000.00 Civil servants 0 0 1,000 $0.50 1,000 $ 1.00 Poor individuals with government subsidized enrollment, per year Poor 451,128 $ 60.00 120,000 $60.00 60,000 $ 60.00 Other poor individuals with enrollment financed by NGOs and development partners Other poor 1,200,000 $ 159.60 1,200,000 $600.00 1,200,000 $ 1,200.00 Total 2,251,128 $ 299.25 2,121,000 $1,060.50 2,261,000 $ 2,261.00 Population enrollment rate 41% 39% 41% Note: Official exchange rate 15,000 LBP per US$ in February 2023 (IMF). The premium is per each enrollee per year. 23 In 2023, the ESSN provided cash transfers to about 160,000 households for 24 months. 16 In all three scenarios, the government sets a cap of US$60 million on its subsidies for the premiums of low-income groups. Because of this cap, the number of government-subsidized enrollees decrease as the premium increases in Scenarios 2 and 3. In each scenario, it is assumed that NGOs and development partners will match the government’s subsidies and will finance the enrollment of an additional 1.2 million individuals, including ESSN beneficiaries and the elderly who cannot be funded by the government, people with disabilities, orphans, and other poor individuals. Based on these assumptions, about 40 percent of the population, or roughly 2.2 million people, would be enrolled in the three scenarios. With increasing premiums and a steady enrollment rate, total premium revenue could increase from US$299.25 million in Scenario 1 to US$2.261 billion in Scenario 3. The goal would be to maximize the amount of premium revenue available to spend on health care. As other countries, the Lebanese government would need to regulate how much of premium revenue could be spent on administrative costs, ideally aiming for less than 10 percent as in European countries. This would leave at least 90 percent of premium revenues to pay for enrollees’ care within the benefits package. Figure 9 shows what the results would look like if 95 percent of the premium revenue in the three scenarios were to be spent on enrollees’ health benefits and only 5 percent on administrative costs, as in Switzerland. Figure 9: Premium Revenue Spent on Basic Benefit Package and Administrative Costs, in $US million per year Scenario 3 $2,148.0 $113.1 Scenario 2 $1,007.5 $53.0 Scenario 1 $284.3 $15.0 $- $500.0 $1,000.0 $1,500.0 $2,000.0 $2,500.0 BBP 95% Admin cost 5% A payer would collect and pool the premiums of all enrollees and use the funds to contract with providers to purchase the basic benefits package. The government would have to decide who could qualify as this payer with a choice between the four options discussed above: (i) a government scheme; (ii) the NSSF public health insurer; (iii) multiple private health insurers; or (iv) a single private health insurer; or a combination of them. Public trust in the payer is paramount. People will only pay a premium to enroll and development partners and NGOs will only help subsidize the premiums if the payer can manage revenue efficiently and in accordance with strict fund management criteria based on international standards. 17 3. Legislative and regulatory framework A coherent legislative and regulatory framework would be needed to set the rules for sustainable health financing. The ICC, the regulatory authority in charge of the insurance sector in Lebanon, is the prudential regulator for health insurance. In addition, there would be a need for market conduct and technical regulation of health insurance covering aspects of underwriting, claims processing, policy disclosures, consumer dispute resolution, adherence to standard business requirements in accounting, financing, and auditing, as well as risk-sharing if there is a multiple insurance system.24 Regulation would also guide the relationship between insurers and providers, including provider payments, and data protection. The government should consider the following policies and rules under the UHC law: A basic health benefits package to ensure universal health coverage • Basic coverage: The UHC law would state that all residents have access to a basic health benefits package that is managed by a payer. • Additional coverage: It could also state that individuals would have the right to enroll with private health insurers to get voluntary additional coverage for any services not included in the basic benefits package. • Criteria for basic benefits package. The UHC law would identify the criteria on which diagnoses and treatments would be ranked in the prioritized list. These criteria can include effectiveness, prevention, cost-effectiveness, improves population health, impact on suffering, and treatment is beneficial. The law would state that the basic benefit package is defined based on a prioritized list of medical conditions and treatment and within the available budget. It would refer to regulations for more detailed implementation procedures. Rules on enrollment to ensure equity of access to care • Enrollment: The UHC law could state that enrollment into the basic benefits package health plan is voluntary or mandatory for all residents. Nobody could be excluded from enrolling in the basic benefits package. • Automatic enrollment: The law could also mandate automatic enrollment into the basic benefits package for specific groups, such as ESSN beneficiaries, with their enrollment financed by the government. Rules on financing and financial management to ensure efficiency and equity in financing. • Premiums: To ensure equity in health financing, the law would state that everybody pays the same premium for the basic benefits package, regardless of age or health status or salary. Premiums would be subsidized for low-income groups. The law could require actuarial justification for a premium increase. • Subsidized premiums: The law and implementing regulations would identify those groups eligible to benefit from premium subsidies. For example, all ESSN beneficiaries, individuals living with disabilities, children living in orphanages, and everybody aged 65 and older could be automatically enrolled and their premiums would be financed by the government and partners. 24The 2007-2008 global financial crisis was the result of consumer abuse and market misconduct. Consequently, regulators of market conduct and consumer protection became as important as the prudential regulator. 18 • Efficient financial management: The law would state the rules for financial management, following international financial management standards. For example, laws and regulations in Austria and Switzerland require that health insurers who offer the basic benefits package may not be for-profit. It could also request payers to keep their administrative costs below a certain percentage of premium revenues, as this is done in the US and in European countries. • Co-payments: The law could require a regulation to be issued by the MOPH to define the co- payments to be charged to patients and to exempt preventive and other important care from these co-payments. • Co-payment ceiling: The regulation would also set an annual ceiling on the total co-payment amount paid by patients to protect sicker individuals against the risk of incurring catastrophic health expenditures. • No balance billing by providers: The law could prohibit providers from billing patients if the costs of their treatment are higher than the price paid by the payer for services in the basic benefits package. This would both manage health care costs and ensure equity in health financing. Policies on the provision of health care to ensure efficiency and manage costs • Efficient provision of care: The law could require that regulations be issued by the MOPH to mandate the efficient use of care. These might include the use of generics instead of more expensive brand-named medicines and a gatekeeper system in which primary health providers would refer patients to hospitals and specialists following clinical pathways to ensure that care is provided in the most efficient way. • Efficient investment: The law could state that the MOPH should develop a national health masterplan to guide any future high-cost investments in hospitals and medical technology in both the public and private sectors. The goal would be to minimize the risk of overcapacity, reduce the provision of unnecessary care, and manage future expenditures. Rules on contracting and paying providers to ensure access to quality health care • Contracting: The law could specify a particular entity to accredit providers to qualify for contracting with the payer or payers. The regulator would then draw up regulations that would set the rules and the format for contracting between the payer and the providers with the goal of ensuring that consumers have equal access to quality care. • Provider payments: The law could require providers to submit the necessary information to be paid by the payer. MOPH regulations could be issued to specify the payment methods to be used by the payer and providers for the services included in the basic benefits package. Rules on standardized data collection, management, and analysis to inform health policy Across a large industry such as health care, rules are required to ensure that information is gathered and reported in a standardized and comparable way, including the format of the claims forms to be used by providers and health insurers and the use of ICD (International Classification of Diseases) coding systems for inpatient care. In this respect, the draft UHC law in Lebanon could define the following rules. • Data collection and analysis: The law could state that all providers and payers should follow standard international rules on diagnoses and procedure coding, data collection and analysis, and transparency. The MOPH would have to choose the mandatory coding system to be used in 19 consultation with the World Health Organization. Regulations would have to be drawn up specifying, for example, which kinds of data must be collected and how often, which claims form to be submitted by providers, whether data should be reported using paper or electronic forms, and how to calculate performance indicators. The law could specify the need for regular analysis of the satisfaction of all customers, providers, beneficiaries, employers, and employees involved with the provision of the basic benefits package. • IT system for health providers and payers: Regulations may be needed to coordinate investments in IT systems across the health system to ensure their compatibility and the ability to make data transfers between systems and between health facilities and insurers. • Data protection: The UHC law should refer to Lebanon’s Electronic Transactions and Personal Data Law No. 81/2018 and require all agencies, providers, and payers to comply with transparency and data protection procedures. In addition, the government would have to specify the supervisory body and devise the rules for supervising public and private insurers to ensure adherence to the UHC law and the principles of good governance. As the ICC is responsible for the prudential regulation and supervision of private insurers, the government will need to choose a market and technical regulator. This could be the ICC or the MOPH or another agency with the necessary capacity and independence to prevent conflicts of interest. The MOPH would continue to play an important oversight and stewardship role in the health sector. Considerations for Lebanon Based on an analysis of the current health financing context in Lebanon, this note presents four potential health financing options and the related reforms that would be needed to achieve basic universal health coverage. Making the right choice of health financing and pooling system for a basic benefits package will influence whether Lebanon’s overarching health goals can be achieved, specifically whether pooling will be efficient, financing will be sustainable, and access to care will be equitable. Decision-makers have a choice among four options for how such a pooling system could be run: (i) the government; (ii) the NSSF; (iii) multiple private health insurers; or (iv) one private insurer. It might also be possible to combine some of these options within the chosen system. The key prerequisites for all these options would be to define a basic benefits package that could be financed within an affordable budget, securing a longer-term financial commitment to funding the package, and putting in place a strong legislative and regulatory framework for the system. The development and implementation of this reform could be supported by the World Bank. The Bank's Health, Nutrition, and Population (HNP) program is already playing a pivotal role in building the foundations for the reforms outlined in this note. HNP support to the MOPH can continue to focus on developing a health financing strategy, proposing a regulatory framework for both private and public health insurance, and preparing key analytics for the development of the benefit packages based on a prioritized list of medical conditions and treatments. Also, another Bank project proposes measures to enhance financial management, budget planning, and domestic revenue management within the public sector, which will provide the foundation for the public financial management reforms at the MOPH recommended in this policy note. 20 Although it will take some time to decide on the best system for Lebanon, the government could prepare for the ultimate decision by taking some initial actions. As a first step, the MOPH could establish a technical commission to prepare the prioritized list of medical conditions and treatments offered in the health sector, using other countries’ prioritized lists for reference. The MOPH would also need to mandate all public and private health providers and insurers to follow standard systems and procedures for coding and data collection and reporting. Another initial step that could be taken would be to employ an actuarial firm to estimate different cost and revenue scenarios for the basic benefits package. Relevant regulations and directives to support providers in the provision of the basic benefits package could also be prepared. Meanwhile, the MOPH could explore ways to monitor and evaluate how providers perform and achieve of health objectives in return for their budget transfers. The MOPH could also introduce PFM reforms to ensure that all government health expenditures are subject to appropriate internal commitment and budget controls. All transfers to providers and suppliers would need to be executed in a timely manner and at the budgeted level. All government arrears to suppliers would need to be cleared, and regular budget forecasting should be introduced to ensure that both the MOPH and providers can draw up credible budgets. The government could also take steps to prepare the necessary legislative and regulatory framework for the pooling system. The ICC could issue regulations to ensure that all private and public health insurers follow international best practice for financial management. Also, the government could mandate all private and public health Insurers operating in Lebanon to limit their administrative cost to less than 10 percent of premium revenues, while requesting them to implement the information security and data protection requirements laid out in the Data Law. The government could also designate an entity to be responsible for the market and technical conduct of private and public health insurance. The MOPH in collaboration with stakeholders could prepare health policies to be considered in health legislation. An evaluation could provide valuable information on which pooling option could best achieve Lebanon’s health goals. The evaluation would analyze the performance and impact of the current three schemes (the government scheme, the NSSF’s health insurance, and the multiple private health insurance) against the fourth option of a private single health insurer. To pilot test this fourth option, the government would contract with an experienced private health insurer to offer a basic benefits package to all residents within a given geographic area. Enrollees would all pay the same premium for the package regardless of their age or health status. 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