location: nan, 'Thailand 
year: 2006 source: HSRI 
title: Extra funding for universal healthcare coverage 
abstract:Thailand experienced a major healthcare reform in 2001 when the newly elected government launched the Universal Healthcare Coverage (UC) scheme, which is also known as the “30 Baht Healthcare Scheme.”  As the UC scheme is an entitlement program, the government has responsibility to provide such program and maintain the quality of the program to meet the standard.  Under the limited budget and commitment to many public programs, the government may have to find extra funding to finance the UC scheme.  There are at least two possible directions for the UC extra funding: reducing the cost of the program by transferring people who are eligible for the UC program (e.g. spouse and children of insured persons under the Social Security scheme) to a preferable healthcare program (e.g. Social Security scheme), and raising government revenues by increasing tax rates or healthcare co-payment.During the period of 2005-09, we estimate that there will be 50-52 million UC eligible people. In 2005, the capitation cost required to maintain the standard of healthcare services is Bt2,000.  When the capitation cost is indexed with the growth of public employee’s salary, the total cost of the UC scheme will be Bt100-136 billion in 2005-09.  Compared with past budget allocation (when capitation rates were much lower), the extra funding required to finance the UC scheme will be Bt31-46 billion.When transferring spouse and children of insured persons under the Social Security or SS scheme (who are currently under the UC scheme) and allowing retirees of the SS scheme and their spouses to be under the healthcare program of the SS scheme, the total cost of the UC scheme would reduce.  With the capitation cost of Bt2,000, the extra funding to finance the UC scheme would reduce to Bt17.6 billion in 2005 and Bt27.5 billion in 2009.The government can also raise extra revenues by increasing the commodity tax rates (e.g. taxes on alcoholic beverages and cigarette as recommended by many policy makers).  When the excise tax rate on alcoholic beverage increases by 40 percent in 2005, additional government revenue raised from excise taxes will be Bt25 billion in 2009.  In the same period, if the excise tax rate on fuel and gas increases by 30 percent, additional government revenue raised from excise taxes will be Bt45 billions.  An increase in the tobacco tax rate by 70 percent will raise additional government revenue on excise taxes by only Bt20 billion.  The additional tax rate on tobacco does not raise a large sum of government revenue because the price elasticity of consumption on taxed tobacco and cigarette is high.  About half of the cigarette consumption was untaxed.  In addition, an increase of value added tax (VAT) from 7 to 10 percent would raise Bt140-200 billions of VAT revenue during the period 2005-09.To raise tax revenues for the UC scheme, the government may choose to raise some combination of commodity tax rate just enough to cover the extra spending on the UC program.  However, this study has shown that, under the existing commodity tax structure, the government should increase tax rates on entertainment, fuel and gas, and clothing.  The marginal cost of public funds for alcoholic beverages and cigarette are high.  Raising their tax rates will further distort the prices and deteriorate efficiency of resource allocation.