Lao People’s Democratic Republic progresses towards stronger health insurance and social security system

VIENTIANE (ILO News) - The Lao People’s Democratic Republic (Lao PDR) has embarked on a landmark revision of its legal framework on health insurance and social security, on its path towards achieving universal coverage.

The International Labour Organization (ILO) is supporting these efforts though its regional Luxembourg-funded project, “Building social protection floors for all: support to the extension of social health protection in Asia.”

Work is ongoing towards a milestone enactment of a revised Law on Social Security and the Law on Health Insurance in the third quarter of 2024. The aim is to establish a comprehensive, coordinated, effective and adequate social security and health insurance legal framework in the country.

Over the years, laudable progress has been made towards this objective in Lao PDR. In particular, the country’s social health protection landscape has changed dramatically over the past two decades and great strides have been made towards the country’s goal of achieving Universal Health Coverage. This has been achieved through the gradual harmonization of previously fragmented social health protection administration through the implementation of a National Health Insurance scheme. As a result, according to the Ministry of Health, 94 per cent of the population currently benefit from social health protection coverage.

“Strengthening Lao PDR's social protection system is crucial for reducing poverty, inequality, and vulnerability among its citizens. It promotes economic stability, fosters social cohesion, and ensures that individuals have access to essential healthcare and social security they need,” said ILO’s Programme Manager Marielle Phe Goursat, who is overseeing the work.

Despite the achievements to date, there are remaining challenges to overcome to ensure equitable access to health care for all citizens, without financial hardship.

Although legal coverage is high, out-of-pocket expenditures represent 49 per cent of current health expenditures, which leaves households vulnerable to the risk of catastrophic health spending due to accidents or ill health. This risk is exacerbated by an increased prevalence of non-communicable diseases and population ageing.

Moreover, compliance with the contributory scheme for workers in the formal sector is a challenge, undermining the financial sustainability of the national health insurance scheme. Inequalities in access to health care facilities and doctors are also prevalent in the context of a largely rural, remote population.

In an effort to address these challenges, in May 2023, ILO shared initial recommendations on the amendments to the social security and health insurance legal framework with the Lao Social Security Office (LSSO) of the Ministry of Labour and Social Welfare and the National Health Insurance Bureau (NHIB) of the Ministry of Health.

This was followed by the initiation of a nationwide consultation process on the revision process led by the Ministry of Health and the Ministry of Labour, with technical and financial support from the ILO.

As part of this process, a comprehensive legal review was implemented to support the alignment of the legislative framework with international labour standards, in line with Lao PDR’s National Social Protection Strategy Vision 2030, Goal 2025, and the National Health Insurance Strategy 2021-2025.

The review encompasses a thorough mapping of the existing national social security legal framework; and an assessment of the national legal framework to identify good practices and well-regulated areas, overlaps and conflicts, and gaps in relation to international labour standards, administration and system design.

On 21 September 2023, the findings of the review were presented during a consultative workshop bringing together stakeholders from government as well as employers’ and workers’ organizations to gather feedback on the law revision process.

The final health insurance assessment report includes key recommendations to the Government to achieve increased coverage and improved service delivery, administration, governance and fund sustainability, and a road map towards the introduction of the new draft legislations.

In parallel with the review, an actuarial analysis, research on access to social health protection for persons with disabilities, and a review of lessons learned from the implementation of Lao PDR’s Community Based Health Insurance scheme are ongoing, which will provide a further evidence base for the law revisions. The next step is the process of drafting the revised laws, with enactment anticipated in mid-2024.

“ILO will continue to collaborate closely with the Government of Lao PDR, employers and workers throughout the drafting process,” said Goursat. “The success of these efforts will benefit the lives of millions of people throughout the country.”