Thailand Case Studies

Thaworn Sakunphanit
Worawet Suwanrada

1. Country’s Socioeconomic Context

Thailand locates in Southeast Asia. Its territory covers an area of approximately

514,000 square kilometres (Figure 1). The official national language, spoken and
written by almost 100 percent of the population, is Thai. Buddhism is the professed
faith of 94.6 percent of the population. Islam is embraced by 4.6 percent of the Thai
people while the rest of the population practices Christianity, Hinduism and other
religions.

Figure 1: Map of Thailand

1.1 Demographic change

Thailand is going rapidly to aging society. The “demographic dividend”, phenomenon

of lower dependency ratio, will end soon. The total fertility rate of Thailand is far
below the replacement level now. The overall dependency ratio, which keeps falling
until 2010 (Table 1: Population projection), will reverse to rise due to an increase
proportion of the elderly. Population age 60+ will increase to more than 10% in 2010
and reach 20% within 25 years. In 2050 nearly one third of Thailand’s population will
be age 60 and over. Latest in around 2005, Thailand entered the period of an "ageing
society". By the year 2030 the proportion of elderly in the Thai population is expected
to increase to 15 percent. The survey of population change 2005 and analysis form
administrative database of Bureau of Registration Administration, Ministry of Interior
showed the same pattern that total fertility rate decreases rapidly than previous
estimation.

Table 1: Population projection

 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
0-14 16.2 15.2 13.4 12.3 11.7 11.4 10.8 10 9.3 8.7
15-59 43.8 46 47.8 48.4 47.7 46.1 44.3 42.4 40.3 38.2
60+ 6 7.1 8.7 10.8 13.3 15.8 18.1 20.1 21.5 22.3
TOTAL 65.9 68.3 70 71.5 72.6 73.2 73.2 72.4 71.1 69.2
Source UN pop 2000

Average family size will decrease continuously from more than 5 persons per
household to 3.9 in 2000, 3.4 in 2010, and 3.1 in 2020. Also data from Urban
Development Cooperation Division, National Economic and Social Development
(NESDB) showed that there is increase migration from rural area to urban area which
will decrease population in rural area from 65.28% in 2000 to 60.01% in 2010.

1.2 Economic Performance

The base of the Thai economy has rapidly changed from agriculture to services and
manufacturing since 1961. Thai economy was mainly relied on the agriculture sector,
when Thailand started the first five-year National Economic and Social Development
Plans (1961-1966). The share of agriculture decreased from 40 per cent of gross
domestic product (GDP) in 1960 to 10 per cent in 2002, and manufacturing increased
from 13 per cent to 37 per cent of GDP. Economic growth has been impressive over
more than three decades. An economic crisis during 1996-1997 brought negative
growth for a few years. Thailand had to enter into a structural reform loan of US$17.2
billion from the International Monetary Fund (IMF). In 1997, the Thai economy had
generated a negative growth rate of 1.4 percent, and a greater decline to minus 10.5
percent in 1998. Nonetheless, a resumption of the Thai economic growth revealed
since 1999. Thailand depends on export for economic growth. Therefore, Thailand
feels an economic crisis in 2009 from problem in real sector. GDP growth in 2008
dropped to 2.5 percent.

1.3 Situation of Poverty and Social Protection

Although there were concerns as early as the drafting of the second national plan
(1967-71) for income distribution and poverty reduction, Thailand uses mainly
economic policy in tackling poverty through economic growth. The country's
economic growth has contributed to a sharp drop in poverty levels. Between 1999 and
2000 poverty rates fell by 2 percent. However, poverty fell between 2004 and 2006 at
a relatively slow pace. The poverty headcount ratio fell from 11.2 in 2004 to 9.6 in
2006. There are 6.1 million people living below the national poverty line of 1,386
Baht/person/month (World Bank, 2008). However, it should be noted that Thai
poverty measurement using absolute poverty line, which is not sensitive enough for
measurement of social exclusion (income distribution).

Economic development in Thailand has been showed greater income disparity rather
than narrowing the gap between the rich and the poor, since the first national
economic and social development plan in 1962, the Gini coefficient for income
distribution increased from 0.41 in 1962 to a high point of 0 54 in 1992 and then fell
slightly when the country faced economic crisis in 1997 (Table 2: GDP growth and
GINI). The share of income of the poorest 20 per cent (quintile) was 7.9 per cent in
1962 and 4.8 per cent in 2004, while the share of the richest quintile was 49.8 per cent
and 51.0 per cent in the same years.

Table 2: GDP growth and GINI

Source: GDP Growth from NESDB

Gini coeff of 1962-1988 from Panarunothai and Patamasiriwat (2001)
Gini coeff of 2000-2004 from NESDB and National Statistical Office (NSO)

According to the Survey of the Older Persons in Thailand, there are still some elderly
who are not secured in terms of living arrangement and/or financial situation. Elderly
still have to depend on family support in their old-age. According to the surveys 1994
and 2002, the proportion of the elderly population who lives alone increased from
3.6% to 6.3%. From the most recent survey in 2007, it increased to 7.7%. Some of
those living along face problems or obstacles such as financial difficulties (15.7%).
Among all elderly, 31.3% do not have savings or any financial assets, and 34.1% have
an annual income of less than 20,000 baht. These situations led the current
government to introduction social protection measures to secure the elderly.

1.4 National response

Actually, Thailand recognized the imbalance of development since the 5 th five years
National Economic and Social Development Plan. Government has paid attention
more to poverty reduction. Different initiatives were developed and implemented.
Lessons were learned and leaded to redesign, then implemented again. From this
learning by doing for decades, finally, basic social protection schemes, the Universal
Coverage Scheme (UCS) and the 500 Baht Pension Scheme, were implemented under
concept of universal coverage. Current government has a policy toward “welfare
state” and proposed the plan of Construction of Welfare Society within B.E.2560
(2017). Social protection is selected as a theme of the 11th five-year National
Economic and Social Development Plans. Aged society has been perceived as one of
new risks for Thai society in the next 20 years.

More detail of the Universal Coverage Scheme is discussed in Section 2. Section 3

provided insight of the 500 Baht pension scheme. Finally, overall impacts of the two
schemes to other social protection schemes are evaluated. Lesson learnt for other
countries will be drawn especially key factors for replication are in Part 4.

2. Universal Coverage Scheme (UCS)

2.1 Process of Introduction

2.1.1 Current Health Care System

Health care system in Thailand is the entrepreneurial market driven system. It has a
pluralistic public/private mix in both health care providers and financing agencies.

However, Most of health services were provided by public health care providers.
These public health care facilities receive government budget mainly for salary and
capital investment and they are allowed to keep their revenue from their services for
running their business. In 2007, 65.9 percent of hospitals and 63.3 percent of beds
belonged to the MoPH (Wibulpolprasert, 2008). Currently, MoPH owns 891 hospitals
which cover more than 90% of districts; and 9,758 health centres, which cover every
sub-district, Tambon. Private hospitals have increased since economic expansion
during 1992-1997. Most of them locate in Bangkok and urban area. There were 318
private hospital and 16,800 private clinics in 2007, which majority of them is in
provincial areas. Most of these clinics belong to doctors who are government civil
servants. They work in their own clinic after office hours.

These health services are finance mainly from third party payers. Thailand reaches the
universal coverage for health care in 2002. Government spending gradually increase
from 56 percent in 2000 to 75 percent of total 343 billion Baht (9.83 billion US$) in
2008. Recurrent health care expenditure as percent of GDP slightly increased from
3.2 percent of GDP in 2001 – 2002 to 3.8 percent of GDP in 2008 (IHPP, 2010).

Thai citizens by law are member of one of social health protection schemes. Civil
Servant Medical Benefit Scheme (CSMBS) for central government employees and
other small public employee benefit schemes cover 7% of population. The Social
Security Scheme (SSS) for private employees covers 15% of population, and the rest
(76% ) are in the Universal Coverage Scheme (UCS). The UCS covers everyone who
is in informal sector either rich or poor. It should be noted that private health
insurance companies play very limited additional role in Thailand due to their high
premium rate and very strict under-write policies.

2.2 The process of how the Universal Coverage Scheme was established

2.2.1 Raising awareness at National Level

Thai health care policy had history of evolution from the ideology of using health care
to strengthen State power in 19 century toward considering health care as an
important part of long-term investment for economic growth. Finally, health is
considered as an entitlement of Thai citizens. Every step pushed the Thai health
system forward to universal access to care and to protect the rights of the people
(Table 3).

Table 3: Cause and effect of health policy in Thailand

Health Policy Implementation
Before 1961, health care was used to Expansion of public health
strengthen State power facilities and health protection
Early National Socioeconomic health is an important part of scheme employee e.g. CSMBS,
Plan long-term investment for SSS
economic growth
1973 Constitution health services for the poor Low income scheme
should be provided free of
 charge
1977 Constitution health is considered as an Universal coverage for health
entitlement of Thai citizens and care
equal access to basic health
services should be guaranteed
Source: Sakunphanit (2008)

Expansion of public health facilities to cover every administrative area was begun
from the 1st five-year National Economic and Social Development Plan (1961-1966).
Health care was considered as an important part of long-term investment for
economic growth, and one of strategic to promoting government during the “cold
war” period. As majority of people were in agriculture sector and lived in rural area. It
was difficult to encourage private health facilities to provide services in rural area.
Therefore, expansion of the public health facilities to cover the entire population is
crucial to overcome physical barriers. The MoPH decided to establish a “hierarchy”
health service system using administrative areas as the main approach for investment
in the health care infrastructure. In the third national socioeconomic plan (1972 –
1976), government set targets to reach “one hospital for every district and one health
centre1 for every sub-district (Tambon)”. The decade of Health Centres Development
project (1992-2001) was launched. In 1993 public health centres were close to people
that they could access for services within one hour by walking.

The government policy of charging for services in public health care facilities was
established in 1945. Later they were allowed to keep their own revenue for run their
own business. An informal exemption for the poor was implemented along with the
user charge.

It took nearly four decade for Thailand gradually moves from “out of pocket
payment” to many “prepayment” schemes. Regarding the informal sector, there were
2 public prepayment schemes, Medical Welfare Scheme (MWS) and the Health Card
Scheme (HCS), which were implemented before UC era

The MWS was called the Low Income Scheme (LIS) at the inception period. It was
introduced in 1975. Coverage of this scheme was put up by several successive
governments. This scheme is finance from government revenue. The name of scheme
was change to Medical Welfare Scheme (MWS) when the expand to cover elderly
people age more than 60 years old, children age 0-12 years old, disability people,
veterans and monks.

The HCS was initiated in 1983 to support primary health care approach in the
community, It was designed as a community financing fund at the beginning. It
expanded nationwide, however a lot of problems occurred due to lack of
administration skill and financial risk. Finally, the scheme changed its financial model
to voluntary health insurance and established the health insurance office at the MoPH
to manage the scheme. Main target of this scheme was households which had income
more than poverty line.

1
Health centres are health care facilities which provide mainly prevention and basic outpatient services. Health care professional in these
facilities comprise public health personal, nurse and other paramedical personal. There were no medical doctors in these health centres.
The policy for Universal coverage for health care could trace back to the idea behind
the HCS (Boonyuen & Singhkaew, 1986). After success implementation of the SSS in
1992, Thai technocrats would like to expand coverage of the “occupational” schemes
both formal sector and informal sector. These pluralistic approaches had weakness in
terms of efficiency, quality and equity. There was debate whether government should
provide care to the poor or government should provide universal health care for sake
of basic human right. The MoPH started to design policy options and estimated cost
of universal coverage. There were 3 policy options, gradually reform existing schemes
to cover all Thai citizens or major reform to set up central agency to manage all the
health insurance or coordinate every schemes. Politicians and related organizations
were advocated through series of discussions and study visit to Australia and New
Zealand (Office of Health Insurance, 1994). International workshops were held
among Thai experts and international experts in 1993 and 1996.

“The Health Insurance and Standard Medical Service Bill” was drafted during 1995 –
1996. This bill proposed a compulsory health insurance model. However, the draft
did not receive full-hearted support from the bureaucrats and politician in the
government (Sakunphanit T. e., 2004). Nevertheless, social movement pushed the UC
policy into the 1997 Constitution and the 8th National Health Plan (1997-2001).

NGO and civil societies play significant role to make legitimacy to the Universal
Coverage for Health Care. Group of NGOs also drafted their National Health Security
Bill and campaigned for universal coverage in 2000. The press also played an
influential role in keeping the general public informed in the UC policy. A public
opinion survey confirmed that the UC policy was popular. Political parties added this
Universal Coverage for Health Care into their policy. Then after General Election in
early 2001, government started implementation of the UCS in 2001. Finally, The
National Health Security Act was enacted on November 19th, 2002

2.3 Implementation

2.3.1 Scheme design

The Universal Coverage Scheme (UCS) is only one public health protection scheme,
which provides health care coverage to all Thai citizens who are not covered by any
other public health protection scheme. This scheme was a result of the reform of the
MWS and HCS. This scheme is administered by the National Health Security Office
(NHSO).

This scheme designs for efficiency by using primary care as a gate keeper and set up
referral system for complicated cases who need inpatient service. Managed care
concept is applied in the UCS.

The UCS provides comprehensive benefit package. Benefits include curative services,
health promotion and disease prevention services, rehabilitation services, and services
provided according to Thai traditional or other alternative medical schools. The UCS
also provides personal prevention services and health promotion services for all Thai
population.
The co-payment of 30 baht per visits was abolished at the end of 2006. Data analysis
indicated that abolition of the 30 Baht copayment had no effect on overall utilization,

Provision of medical services under the universal coverage has been changed from
fragmented service to the new integrated “Continuum of Care” design for more
efficient and effectiveness. The UCS introduced the new periodic health examination
as a risk stratification tools. Goal of this screening is to prevent the onset of disease or
the warning of an existing disease. Many chronic diseases are under active manage
approach.

Health facilities have to register to the scheme. But it is policy of this scheme to
contract the primary medical care unit to provide ambulatory services for the
beneficiaries, and is the first contact point for the beneficiaries. They are not allowed
to go directly to secondary or tertiary care facilities without referral from the primary
medical care unit except accidental or emergency situations.

Although health information technology is fragmented, there are 2 applications which

providers and social health protection schemes now accept to share in nationwide
level. The national beneficiary registration system bases on uniqueness of national
personal identification number. A centralized registration database has been developed
since 2002. It covers entire Thai population include information of the CSMBS, the
SSS and the UCS is updated regularly twice a month.

2.3.2 Costing for the Universal Coverage

The UCS prepare actuarial model to estimate annual budget. This estimation is used
for negotiation with the Bureau of Budget on yearly basis.

Fiscal space is estimated from a long term financial projection. The earliest model
was developed in 2004 by experts from The International Labour Organisation (ILO)
and the Thai counterparts. Currently, models for the CSMBS, the SSS, the UCS have
been developing by experts from the ILO and Thai counterparts using the ILO’s social
budgeting models. The preliminary results of projection show that Thailand will
spend around 4.5% of GDP on health in 2020.

Different payment mechanisms are used in the UCS to manipulate behavior of

hospitals.

The SSS with supervision from experts from the ILO and Thai experts has been
introduced capitation to Thailand since 1992. However, small amount of budget are
kept to pay high cost prosthesis and equipment by fee schedule.

The MoPH had modified methodology of capitation of the SSS in 6 provinces under
Social Investment Project (SIP) during 1998-2001. This model used capitation for
only out-patient and case-mixed payment (DRG) for inpatient. This initiative can
solve the problem of high cost in-patient care. These 6 provinces were selected to be
the first batch of province for the UCS in 2001, before expanded to nationwide.
Currently, the UCS uses different payment mechanisms are used for specific type of
services for providing different degree of inceptive and cost containment pressure to
health care providers. Capitation is used for most of prevention services and
ambulatory care. In-patient services are reimbursed using case-mixed system, DRG.
However, the UCS approach is different from “original” DRG payment system that
the global budget for in-patient is calculated, and total Relative Weight of DRG is
used to allocate the amount of money paid to hospitals. Small fraction of budget is
allocated to pay by fee-for-service method for specific services or equipments i.e.
prosthetic heart value.

The UCS requires that contracted health care facilities have to send clinical data and
financial data for reimbursement and adjust payment rate. The NHSO which manages
the UCS schemes and representative of health facilities negotiate for capitation rate
and payment rate for other payment mechanism every year.

Voluntary Quality Improvement Programe is encouraged in parallel with cost

containment mechanism. Healthcare Accreditation Institute (Public Organization)
provides voluntary hospital accreditation for both public and private providers. This
accreditation is popular for hospitals to show their reputation to public. The UCS
provided grants to this institute for improvement of quality process in hospitals.

Performance of the UCS is evaluated annually from external evaluator. As a financing

agency, the UCS is subjected to closely financial monitor by the Office of The Auditor
General of Thailand. Finally, performance reports and audited financial statements to
the Cabinet and the Parliament and reports in the Royal Gazette.

2.3 Impact analysis

Increase Access to Care

After implementation of the universal healthcare scheme, proportion of insured

people having access to health facilities when ill has risen from 65% in 1996 to 71
and71.6% in 2003 and 2004 respectively (Table 4). Further analysis showed that trend
of OP utilization rate is slightly increased. The utilization rate of both periods should
be analysed separately due to different methodology of the survey in 2003-2005 and
2006 – 2007.

Table 4: Health Services Utilisation

Source: NSO: Health and welfare survey 2003 – 2007

Beneficiaries of the UCS did not entitle to get antiretroviral drug for AIDS treatment
and renal replacement therapy at the inception of the scheme in 2001. However, the
triple-drug ART as a standard of care to people living with HIV/AIDS is integrated
into the benefit package of the UCS in 2006. And in 2007, beneficiaries of the UCS
beneficiaries can access to chronic hemodialysis, CAPD and renal transplantation.

Increase Quality of Care

The UCS supports “real” concept of primary health care which people themselves
must become the key actors and active involvement in improving their health, which
is closed support by health personnel. Community committees are established which
is finance by the UCS and local governments. These funds are used for prevention
and promotion for health and other social determinants of health according to health
problems in each community. Annual health examination is included in benefit
package of the UCS to screen health risk and to provide intervention. These activities
are operated by heath personals and health volunteers in communities. Community
and individual involvement are currently encourage to balance the previous top down
approach.

Analysis of the National Health Examination Survey (Aekplakorn, 2010) revealed

that after Universal Coverage Policy in 2002, percentage of well controlled
hypertension and Diabetic patients increased more than double from 2003 to 2008
(Table 5). These two diseases are included in annual screening program, which
follow by chronic disease management.

Table 5: Better performance of hypertension and diabetic control

Diseases 2003-2004 2008-2009
Hypertension among those aged 15 and above
Prevalence of hypertension (% with sBP>=140 or dBP>=90 mm) 22.1 21.4
Never been diagnosed 71.4 50.3
Being diagnosed but not treated 4.9 8.7
Getting treatment but uncontrolled (sBP >=140 or dBP >=90) 15 20.1
Getting treatment and well controlled (sBP <140 and dBP<90) 8.6 20.9
Diabetes among those aged 15 and above
Prevalence of Diabetes (%; FBG>126 mg/dl) 6.9 6.9
Never been diagnosed 56.6 31.2
Being diagnosed but not treated 1.8 3.3
Getting treatment but uncontrolled 29.4 34.9
Getting treatment and well controlled (FBG<130 mg/dl) 12.2 30.6
Source: National Health Examination Survey 2003-2004 and 2008-2009

2.4 Challenges ahead

Expand coverage to people who live in Thailand

Minorities who live in boarder of Thailand are unidentified nationality, and are
excluded from universal coverage for health care. The Cabinet has just approved to
provide budget to provide medical care for this group. There are also other foreigners
who live in Thailand which are still not covered. This group is more complicate. Since
some are illegal migrants.

Establish system governance in national level and alignment of Pluralistic system

Thailand has to establish system governance body to provide policy direction to

health care system. Health care financing also has to be harmonized. Single payer
system is not possible. Many countries - which have universal coverage of health care
- have many insurance schemes, and their schemes are harmonized under the same
revenue collection and payment mechanism under the appropriate system governance
of the government.

Inequity from supply side


Distribution of health care facilities among rural and urban areas or among regions
still exists (Table 6), and it affected equity in people’s access to care. Distribution of
health personnel is also different among Bangkok and regions.

Table 6: Health Facilities by Regions

Health Public hospitals Private Hospitals Total
Population
Centres
Number Beds Number Beds Number Beds to bed ratio
Northern region 2,228 216 20,314 50 3,944 266 24,258 1:498
Northeastern region 3,464 318 26,752 42 2,801 360 29,553 1:740
Central region exclude Bangkok 2,556 266 47,050 105 9,066 371 39,735 1:388
Bangkok 43 47,051 89 12,711 132 29,092 1:223
Southern region 1,510 177 15,327 32 2,042 209 17,369 1:498
30,56 1,33 140,00
Total 9,758 1,020 109,443 318 4 8 7 1:468
Source: Report on Health resource survey 2007

Brain drain: inadequate medical personals

Working harder without enough incentive together with increasing demand and more
financial incentives in the private sector have resulted in the outflow of human
resources, particularly physicians, from the rural public facilities. This situation has
adverse effect to social health protection schemes. Because they use mainly public
health care facilities to service their beneficiaries.
.

3. 500 Baht Universal Pension Scheme

3.1 Necessity of the Introduction of New Public Pension System

It is not exaggerated to say that, various factors are forcing Thai government to
consider the design for new public pension scheme. As mentioned in the first section,
Thailand is currently under the process of demographic change towards aged society.
The National Economic and Social Development Board (hereafter, NESDB) projected
that the percentage of the elderly population (in case of Thailand, which means older
than 60 years old population) will increase gradually and exceed 20% in 2023, and in
2030 the potential support ratio is going to drop to 2.52 (NESDB, 2007). The 2007
Survey of the Older Persons in Thailand by National Statistical Office (hereafter,
NSO) found that, the main source of income for the elderly in Thailand is still the
financial support from their children. Nevertheless, the fertility decline may more or
less change this trend in the near future. Among Thai people, such continuation of
aging process starts to raise public awareness of financial preparation for their old-age
livelihood. According the opinion poll “Knowledge and Attitude toward the
Elderly“among 18-59 years old population nationwide conducted under the
cooperation of NSO, Ministry of Social Development and Human Security and
College of Population, Chulalongkorn University in 2007, approximately 95% of the
observations vote most to the importance of financial preparation. Unfortunately, this
poll has confirmed the fact that, 42.4 % of them have not started to prepare financially
or have not ever thought about their old-age yet.

Theoretically, lack of private financial preparation for old-age may be substituted by

public pension, if well equipped. Thailand had various types of formal income
maintenance systems for providing financial support to the elderly, regrettably, such
system was not universal to all elderly population before the introduction of 500 Baht
pension scheme. There are compulsory and contributory public pension systems for
only private and public employees. Those systems are the Social Security Fund
(private employees; contributory system), Government Pension Scheme (for central
and regional government officers; be comprised of two parts of pension, namely
national budget financed part and contributory part), Local Government Officers
Pension Scheme (local authorities ; non-contributory system), Private School
Teachers and Headmasters Mutual Fund (private school teachers and headmasters;
contributory system) and Public Enterprise Employees Pension Scheme (public
enterprise employees; mostly contributory system in form of provident fund, which
the employees are forced to save a certain rate of monthly wages and the employers
contribute equally or less on top of that.) (Chandoevit, 2006 and Suwanrada, 2009).
For the rest of the working population mentioned above, there existed no pension
scheme. They could access to the mean-tested old-age allowance system, which was
the former shape of 500 Baht universal pension scheme, if necessary to them.

Such unfair public pension system in terms of coverage and accessibility caused
widespread requests for the reform of current public pension system or the
introduction of new system. In addition, in the Part 9 Rights to Pubic Health Services
and Welfare from the State and Directive Principles of Fundamental State Policies
parts of the Constitution of the Kingdom of Thailand B.E. 2550 (2007), two sections
concerning with the grand design of public pension system in the future has been
clearly written respectively.
Section 53. A Person who is over sixty years of age and has insufficient
income for the living shall have the right to receive such welfare and public facilities
as suitable for his or her dignity as well as appropriate aids to be provided by the
State.
 Section 84(4). The State shall pursue directive principles of State policies in
relation to economy to provide savings for the people and State officials for their
living at the old age;

The rest of this section will be composed of four parts. Firstly, the so-called social
debate on the introduction of pension system in Thailand before the introduction of
500 Baht universal pension scheme has been introduced. Secondly, the process of
introduction will be discussed. Thirdly, the implementation of 500 Baht universal
pension scheme will be explained. Finally, we will clarify the challenges ahead of 500
Baht universal pension scheme under the design of public pension system in Thailand.

3.2 Social Debate before the Introduction of 500 Baht Pension Scheme

In order to extend the coverage of old-age income maintenance to the rest of

population, which the majority are in informal sector, there are three policy options.
The first policy option is to change the existing mean-tested old-age allowance
scheme to universal pension. This option is of course tax-financed. The second policy
option is to establish new contributory public pension scheme. The third policy option
is the promotion of the so-called Community-based Social Welfare Fund (hereafter
abbreviated as CBSWF). This option can be theoretically regarded as privately
provided (or initiative) pension system. This section will cover all the main points of
the first and the second options.

3.2.1 The Establishment of New Contributory Public Pension System

Previously, the establishment of new contributory public pension system has been
proposed in many forms. Until the proposal of the so-called “National Pension Fund”,
Ministry of Finance used to promote the plan of defined contribution scheme
“National Provident Fund”, which afforded to force the employees to save more. This
scheme also expected high-income classes in informal sector to voluntarily
participate. Nevertheless, this proposal has been criticized and is still pending because
it did not focus on the medium or low income classes, which are the majority of the
population without formal old-age income maintenance tool.

Recently, there are many academic researches, which were financially granted by
Thailand Research Fund, Thai Health Promotion Fund or Foundation of Thailand
Gerontology Research and Development Institute (TGRI), conducted by Thai
academicians. Those researches are Pananiramai (2003) Khamnuansilpa and the
others (2006), Patamasiriwat (2007), Suwanrada(2008b) Chandoevit and the others
(2008) and Suwanrada and Chandoevit(2009). The direction of policy proposal of
those researches is to maintain the mean-tested old age allowance system for the
initial old, especially for the truly unprivileged elderly, in the transition period and to
establish the contributory pension scheme for the rest of the working population.
Moreover, the central government and/or local authorities may support financially for
the contribution of the poor. In addition, local authorities are proposed to be the node
of contribution collection. There are many reasons why many academic researchers
preferred contributory pension to universal pension, i.e. the favour of self-reliance
with dignity rather than begging from the government, the resources should be
allocated to the truly unprivileged elderly rather than equally allocated, the concerns
on increase of financial burden of future generation affecting by the fertility decline,
as well as the capacity of government budget.

From 2006 to 2008, these researches have been presented many times not only at the
academic forums among academicians but also in broadly public forums, in which
many stakeholders, i.e. academicians, central and local government officers,
practitioners, NGOs, politicians, community representatives and general participants
participated. In addition, in the Elderly Council Congress 2008 in April 2008, the
participants agreed to the policy option of the establishment of the contributory
pension scheme for the rest. The National Elderly Committee also approved in
principle the introduction of this policy option. Fiscal Policy Office, Ministry of
Finance gave up the idea of National Provident Fund and afforded to proposal the
National Saving Fund option, which focuses on the establishment of the contributory
pension scheme for the rest. The National Saving Scheme for Old-Age Promotion
Sub-committee, which was assigned by the National Elderly Committee, became the
platform for brainstorming and revising the Ministry of Finance option.

Finally, after the introduction of 500 baht universal pension scheme explained in the
following chapter, in December 2009, Abhisit Vejajiva Cabinet has approved the
“National Pension Fund Act B.E. 25XX”, which aims to establish the additional
pension scheme for working population in informal sector on top of the universal
noncontributory 500 baht pension. At present, this act is waiting at the Council of the
State for the pass through the decision making of the parliament. This option proposes
the voluntary, contributory and defined contribution type pension scheme. The target
group of this scheme is the 20-59 years old working population who have not
affiliated to any compulsory public pension schemes. Basic contribution is 100 baht
per month, which is paid at Government Saving Bank and Bank for Agriculture and
Agricultural Co-operatives. Government co-contributes on top at three rates 50-80-
100 baht per month depending on age of contributor. For the sake of individual
account, of course, low-income workers or the members who do not afford to pay
temporarily can skip the contribution without any penalties. The benefits will be
allocated to the contributors when he or she becomes 60 years old in form of life
annuities. The level of pension depends on his or her contributions. The persons with
low economic capacity who cannot completely contribute, such as the disability, the
government will contribute 50% of normal rate into his or her individual account
instead.

3.2.2 The Promotion of Community-based Social Welfare Fund

In many areas of Thailand, for example Songkhla, Lamphang, Trat or Khonkaen

provinces or Bangkok Metropolitan, a large number of communities have initated the
so-called Community-based Social Welfare Fund. The objective of such establishment
is to solve the problem of the inadequacy or the lack of publicly provided social
welfare services, particularly pension coverage. These schemes provide various types
of welfare through the lifecycle of the community members. The benefits often
include family support (maternity fee), educational loan, community business loan,
subsidy for medical expenses, subsidy for funeral expenses, etc. In some groups,
pension is also one of the special-feature benefits (Suwanrada, 2009). Some Thai
practitioners and academic researchers afforded to propose this scheme as the core for
old-age benefits expansion.
Table 7 shows the benefits package of a type of the Community-based Social Welfare
Fund in Songkhla (a province in the south of Thailand), which is widespread known
as Contractual One-Baht Expenses Reduction Group. In principle, the members of the
scheme will strictly decrease their unnecessary expenditure 1 baht for his or her
contribution 1 baht per day. After paying continuously contribution for 180 days, the
member will be eligible for all types of benefits except pension, which requires long-
term contribution for 15 years. The level of pension depends on the duration of
contribution as shown in Table 7. Chob Yodkaew, who is the founder of this scheme,
thinks that, to contribute 1 baht per day by cutting unnecessary expenses is self-
training and applicable to everyone. Thus, such scheme is friendly even to the poor
because of its low contribution rates and its accessibility.

However, Suwanrada (2009) has pointed out the limitations to the community-based
social welfare fund, particularly related to pension benefits. There exists no
interregional insurance function because each group is administrated under a unified
rule but is financially independent without any cross-subsidization across
communities. In addition, the financial sustainability of the scheme depends on the
internal situation of the communities such as, the number of members, the balance
between contribution and benefits, the returns of the fund and the age structure of the
members. There are a large proportion of elderly as members in some places due to
the attractiveness of the subsidy for funeral expenses and pension. There is no
guarantee that young generations will participate voluntarily in such areas, potentially
harming the financial sustainability of the fund in the long run (Suwanrada, 2007). At
this stage, Abhisit Vejajiva Cabinet made decision to allocate subsidy for the well-
organized groups in order to empower the community-based welfare fund.
Nevertheless, the utilization of CBSWF for pension coverage purpose has not been
emphasized clearly by this government.

Table 7: Benefit Package of CBSWF in Songkhla Province

Types Details
- For Newborn Baby: 500 baht per birth (limited to 1,000 baht /
Maternity year)
Pay - For Mother: Medical Expenses Subsidy 100 baht /nights
(limited 5 nights/birth)
Medical
Expenses 100 baht / night (limited to 10 nights per year)
Subsidy
Education
30% of Educational Expenses
Loan
2,500 baht – 30,000 baht (according to contribution periods)
Funeral
180 days - 2,500 baht 1,460 days - 15,000 baht
Expenses
365 days - 5,000 baht 2,920 days - 20,000 baht
Subsidy
730 days - 10,000 baht 5,840 days - 30,000 baht
Debt Clearing Maximum 30,000 baht (limited only to debt of local/community
for the Death saving organization and continuously and punctually repaid debt )
Reward 50% of saving of the death (limited to 15,000 baht and
Saving Reward
local/community saving organization account / 100 baht monthly
for the Death
paid to the surviving family)
The Needy Fund will pay contribution as his/her representative
Contribution
Collector 130 baht / time (30 baht will used as daily contributions)
Compensation
300 baht – 1,200 baht/month (according to contribution periods)
15 years - 300 baht/month 40 years - 800 baht/month
20 years - 400 baht/mont 45 years - 900 baht/month
Pension
25 years - 500 baht/month 50 years - 1,000 baht/month
30 years - 600 baht/month 55 years - 1,100 baht/month
35 years - 700 baht/month 60 years - 1,200 baht/month
st
Remarks: 1 US$ = 32.324 Baht (as of 1 Quarter of 2010)
Source: Table 3 in p.57 of Suwanrada (2009).

3.3 The Process of the Introduction of 500 Baht Universal Pension Scheme

3.3.1 Historical Background: before universal pension scheme

The old-age allowance system was established in 1993 in form of mean-tested system
under the responsibilities of the Department of Public Welfare to provide financial
assistance to the unprivileged elderly, defined as a person at least 60 years of age with
inadequate income to meet expenses, with no supporters, be abandoned or unable to
work. The allowance per head per month was 200 baht (7.90 US$ in 1993). In the
beginning, the process of selection is as follows. Firstly, the villages’ public welfare
assistance committee had to identify eligible elderly. After that, the provincial
unprivileged elderly selection committee would recheck the eligibility of the targeted
elderly and passed their name lists to the provincial governor for official approval. In
the first year after the introduction of this scheme, the numbers of recipients was
merely 20,000. In 1995, they were increased to 110,850. See Figure 1.

In 2000, the amount of allowance increased to 300 baht (7.47 US$) per head per
month. In 2002, the rule for targeting the appropriate recipients has been revised,
namely, the elderly who were in several unprivileged situations or inhabiting remote
area with minimal public services should be prioritized. In addition, the scope of
members of selection committee has been diversified; to representative from local
authorities or elderly related local organization or community.

In 2005, there were big reforms on mean-tested old-age allowance system. Towards
the decentralization process in Thailand, the tasks of identifying clients and defining
allowance payments were delegated to local authorities through grants from the
central government, namely, the Department of Local Administration (DOLA),
Ministry of Interior. The definition of unprivileged elderly was maintained as before.
The targeting process occurs cooperatively between local authorities and the
“prachakom” (community council). See Figure 3. The elderly in the new applicants
list and the waiting list (from previous fiscal year) will be ranked by the community.
The community councils uses a range of method for ranking, i.e., ranking by age of
the elderly, using the majority voting mechanism, adopting the community committee
system, ranking by regarding various characteristics of the elderly, allocating
allowance to all elderly (Suwanrada, 2009). In addition, local authorities with an
adequately strong fiscal resources can use their own funding to increase allowances
(totally must not exceed 1,000 baht per month) or increase the number of qualified
recipients. In 2006, benefits have been increased to 500 baht (13.88 US$) per head per
month.

Figure 2: The Number of Old-Age Allowance Recipients after 1995

Source: Figure 2-1 in Suwanrada and Kamwachirapithak (2007) and Ministry of Social
Development and Human Security

Figure 3: Old-Age Allowance System Targeting Process

 Name List Ranking by
Name List
of the Community
New of the
eligible
Applicants eligible
elderly
elderly

Waiting List from Ranked Name

Waiting List from Ranked
List Name
Last Year
Last Year List

Opposition
Examination Public Announcement
Committee 15 days

No Opposition

Exclusion Certified by Head of LA

from Name List
within 15 days Approved
Approved
Recipients
Recipients
Ministry of Interior Name
New Waiting Name
DOLA List
New Waiting
Name List List
Name List

Source: Figure 1 in Suwanrada (2009)

3.3.2 Limitations of mean-tested old age allowance system

In practise, there were many limitations on the implementation of mean-tested old age
allowance system. Basically, all local authorities had to follow the process clarified in
Ministry of Interior Order on Old-Age Allowance Payment of Local Authorities
B.E.2548 (2005). According to Suwanrada (2009), local authorities had extremely
diversified understandings in the process among local authorities. Some allocated
allowance to all elderly without mean-tested procedure, while some followed the
process strictly. The definition of prachakom was also treated differently. Some local
authorities were strict such that, they created two-tiers committee system or cross-
check or recheck system in order to maintain the transparency and good governance
on unprivileged elderly selection process. Nevertheless, targeting inefficiency
problems occurred. According to the Monitoring and Evaluation Project of National
Elderly Plan by College of Population Studies, Chulalongkorn University, more than
50% of unprivileged elderly still have not received the old-age allowance.

The implementation failure mentioned above more or less forced the government to
concern the change 500 baht pension scheme from mean-tested to universal. ILO
(2004a and 2004b) and Mujahid G., Pannirselvam J. and B. Doge (2008) also
recommended the introduction of such scheme. The change of the philosophical view
of the government is also critical factor for the change. It reflects from the policy
speech of Prime Minister Abhisit Vejajiva delivered to the parliament at the start of
his cabinet in the end of December 2008 or the opening speech at the Elderly Council
Congress 2009 in April 2009, which showed his concern on the old-age allowance as
the right of the elderly and the grateful rewards from the society.
3.4 Implementation of 500 Baht Universal Pension Scheme

Following the decision making of the National Elderly Committee (Chairperson,

Prime Minister), 500 Baht universal pension scheme has been officially kicked off in
April 2009. At the stage of April-September 2009 which was the midst of fiscal year
2009, Thai government used additional budget to implement this scheme as one item
of economic stimulus package using the authority from the Order of National Elderly
Committee on Old-Age Allowance Payment B.E. 2550 (2009). From fiscal year 2010
(October 2009-September 2010), the Order of Ministry of Interior on Old-Age
Allowance Payment B.E. 2550 (2009) has been launched in October 2009. The source
of fund of the scheme has been switched to annual government budget.

All elderly (over 60 years old), who are not in elderly public facilities or do not
currently receive income permanently (i.e. government pension recipients,
government employed persons), are eligible to the scheme. In principle, the elderly or
the authorized representative must register at the local authorities, where he or she has
inhabitancy registration. The qualified recipients can choose among four methods; (1)
to receive cash directly at local authority office by himself, (2) to delegate authorized
representative to receive cash directly at local authorities office, (3) to have pension
be transferred to bank account of the elderly and (4) to have pension be transferred to
bank account of the authorized representative. However, the elderly must bear the fee
for bank account transfer if they do not have Krungthai Bank account. To disseminate
the information of the universal pension, not only the announcements of local
authorities, the commercial film on free television or advertising board are used to
persuade the elderly to join the registration. At the same time, the booklet on the basic
rights of the elderly produced by the Ministry of Social Development and Human
Development are also distributed.

As of fiscal year 2010, the number of 500 baht pension recipients are approximately
77.5% of elderly population. There are still 1.22 million elderly who have not
registered to this scheme yet. See Table 8.

Table 8: Number of 500 Baht Universal Pension Scheme

Number of the Elderly
No. of the Elderly (as of September 30, 2009) 7,239,755
No. of the Recipients (Mean-tested System) A 1,872,182
After Introduction of Universal Pension
- 1st Round Registration (April-Sept 2009) B 3,576,661
- 2nd Round Registration (Oct 09 – Sept 2010) C 204,050
No. of the Registered Elderly (A+B+C) 5,652,893
Government Officers 360,679
Non-registered Elderly 1,226,183

3.4 Challenges ahead

As mentioned above, three competing schemes are in the concern of Abhisit Vejajiva
cabinet. He is still holding all cards in his hand. Challenge ahead for Thailand is to
make clear the picture of grand design for public pension system. Following the
speech of Prime Minister Abhisit Vejajiva on many occasions, we can sketch the
blueprint of his grand design for public pension system in the future. The government
officers have separately their own pension system. While, universal 500 baht pension
scheme is going to become basic pension or social protection floor. Old-age benefits
under the Social Security Fund or life annuities from National Pension Fund becomes
the first tier of private employees and the rest of population (excluding government
officers) respectively. Currently, there are a few movements, which can be expected to
promote more or less the adjustment among various previously fragmented pension
systems. For example, because of the needless of targeting process, the universal 500
baht pension scheme is going to be transferred from local authorities to the authority
of the central government. In addition, the so-called National Welfare Provision
Promotion Committee has been formally established to sketch the grand design of
social protection scheme in Thailand.

4. Conclusion: For the build-up of SPF in Thailand

4.1 Joint impacts of UCS and 500 Baht pension on the entire Social Protection Floor
building

- Poverty reduction
Not only income security scheme like 500 Baht Universal Pension, but also
the UCS decreases poverty. There was a study showed poverty reduction from
the UCS during 2001-2004 (Siamwala & Jitsuchon, 2007). Recent analysis
(Table 10) revealed that around 88,000 household in 2008 were prevent from
poverty. Out of pocket payment for health care increased the numbers of poor
Thai households by 9.9 percent (=1.4/14.4) in 1996. This figure dropped to 5.4
percent (=0.5/8.6) in 2008.

Table 10: Poverty impact of out-of-pocket payments

1996 2000 2004 2008
Pre-payment poverty headcount 14.4% 18.6% 10.9% 8.6%
Post-payment headcount 15.8% 20.3% 11.5% 9.0%
Poverty impact 1.4% 1.7% 0.6% 0.5%
Source: Limwattananon (2010): analysis of Health Welfare Survey (various years)

- Universalism rather than targeting

Thailand gradually moves from targeting approach to universalism. Thailand

used to use targeting approach for sake of fiscal constraints in both health and
elderly income allowance. However, there were many concrete evidents both
type I error (benefit leakage) and type II error. The poor did not protect
properly.

Egalitarian approach to providing equal access to necessary health and social

services was debated in the 1970s. Two decades later after economic crisis,
Social movements successfully extended the egalitarian concept into the 1997
Constitution, which leaded to a universal health coverage policy 2002. Further
social movement and advocacy of elderly society push the universal elderly
 income security into the 2007 Constitution. Finally, current government
announced for the universal 500 Baht pension scheme and amended the
Elderly act. Although this income security is not enough for living condition, it
provide more secured in old-age lifespan.

Although main stream of social protection in Thailand is move toward the

egalitarian policy, balance of the social risk management between individual
and institutions still a hot debate especially the pension system. Many affluent
groups are still libertarian or laisser-faire.

4.2 Common obstacles in UCS and 500 Baht Universal Pension

- Infrastructure
Health care infrastructure should be the first step before arrangement of health
care financing for universal coverage. Well function of local governments are
needed for universal pension for informal sector.

- Administrative capacity

Capacity of to design, implementation and monitor the system under specific

context of country has to be establish and maintain. This is a long term
investment.

- Aging society

Strategies to ensure healthy and productivity elders are needed. Social health
protection schemes have to not only guarantees access for everyone, but also
actively improve health service benefits in such a way to encourage people to
change their behaviour to healthy life style.

Long term care for elderly who finally loss their physical capability and need
both health care and long term care is another issue. Home-care should come
before institutional care. And the traditional pattern of care within the family
has to encourage as far as possible

- How to Financial and Sustainability

The UCS and 500 Baht Pension Scheme now depend on general revenue
financing through annual budgeting process, and remains vulnerable to receive
budgets below actual cost of services from budgetary competition among
Ministries. Current taxes are not enough, new taxes are needed.

4.3 Key factors for replication (South-South cooperation)

Political and system ideology

Experiences in Thailand have shown that system ideology with an appropriate social
justice is a prerequisite of social policy formulation. Economic development, which
emphasizs on growth and ignore redistribution, lead to inequities and social unrest.
Stake holder participations

The interrelationship among of civil society, academic and politician in policy is the
key of success. Prof. Dr. Prawase Wasi proposed the concept of “Triangle that moves
the mountain”. The Triangle consists of: Creation of relevant knowledge through
research, Social movement or social learning and Political involvement (Wasi, 2000).
This concept was applied successfully during the agenda setting, policy formulation
and policy implementation of the UCS and 500 Baht Universal pension scheme.

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