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Lao PDR

Updated by Sven Nef on 21.04.2017

Overview of social security

From 1993, the social security in Lao PDR was developed in two separate social systems. One is the system for the public sector employees and the other is for the private sector employees. The developments are as follows. In 1993, the decree 178/PM regarding the social security system for public employees was approved. In 1999, the decree 207/PM regarding the social security system for enterprise employees was approved and it was officially implemented in mid 2001. In 2006, the revised decree 70/PM regarding the social security system for public employees was approved and came into force in 2008.
Currently the social security system of Lao PDR consists of 4 schemes:

  • Civil Servants Scheme (CSS) for the civil servants (SASS: State Authority for Social Security);
  • Social Security Organization (SSO) for the private sector employees since 2001 in response to the market economic growth;
  • Community Based Health Insurance (CBHI) for the informal economy workers;
  • Health Equity Funds (HEF) for the very poor;

Although CSS and SSO are already providing a relatively comprehensive set of social security benefits, the two others are focusing only on access to health care.(See the table)

More about social security schemes and programs in Laos

  • Civil Servants Scheme (CSS) and the State Authority for Social Security (SASS)
  • Social Security Organization (SSO) for private sector employees

The decree regarding social security system for the private sector employees was approved in 1999 and it was officially implemented in mid 2001. It is a contributory and compulsory scheme. The scheme is applied to all employers who have 10 or more employees. The total contribution rate is 9.5% of employee’s earnings in which 5% comes from employers and 4.5% from employees. The insurable target groups are all employees who work for State, private and partnership enterprises in the areas of industry, agriculture and services. The SSO for the private sector is a self-financing body under the supervision of MOLSW. There is a tripartite board of directors comprising 11 members: 3 persons from government, 4 persons from employers’ group and 4 persons from employees’ group. The board of directors is the supreme governing body of the organisation. The management team for daily operation of the organisation comprises one director general and two general deputy directors. The board of directors is composed of 1 chairman and 2 vice-chairmen who are appointed by Prime Minister according to the recommendation of the MOLSW. Some key statistics of SSO’s performance are as follows.2

 

Number of covered business units by year
 Year 2007 2008 2009
 Number of covered business 378 435 601

 

Number of covered business units by business size (as of 2008)
 Business size 10-99 100 +
 Number of covered business 367
61%
234
39%

 

Number of covered business units by industry type (as of 2009)
 Industry type Agriculture Industry Service
 Number of covered
 business
11 181 409

 

Number of insured employees by year
 Year 2007 2008 2009
 Number of insured
 employees
36 160 42 959 47 067

 

Number of insured employees by business size (as of 2009)
 Business size 10-99 100 +
 Number of insured employees 7 295
15.5%
39 772
84.5%

 

Number of insured employees by industry type (as of 2008)
 Industry type Agriculture Industry Service
 Number of insured
 employees
183 22 880 24 004

 

Health care

As for health care, Lao PDR started with a parallel approach of launching and extending social health protection to the formal and informal sectors and seeking mechanisms to cover the poorest segment through social assistance. After nearly twenty years of separate development of four different demand side schemes – for civil servants, private sector employees, informal economy workers and the poor, the scaling up and combination of these schemes is on the agenda for coming years. Just how this is done, at what pace, with what balance between the four schemes and in what sequence is still to be decided.

One of the resolutions made by the Eighth Party Congress on financing health care is the expansion of social health protection for all. Consequently, the Prime Minister’s office requested MOH, MOLSW and Ministry of Finance (MOF) to take steps towards the merger of all social health protection systems.Lao PDR aims at creating a National Health Insurance Fund (NHIF), which would cover all Lao citizens, foreign residents and expatriates living in Lao PDR. The NHIF would be composed of existing social health protection schemes: CSS/SASS (as far as their health insurance components are concerned), SSO, CBHI and HEFs. The NHIF would be financed through various sources: the State budget, SASS, SSO, contributions of the insured (households) and support from individuals, communities, domestic and international organizations. The NHIF will be at least partially contributory. Insured members will access a set of cost-effective services for high incidence treatable conditions’ on a cashless basis and the presence of a viable district health system will be supported. The MOH is responsible for the implementation of the NHIF in close collaboration with MOLSW and MOF.

This commitment is notably reflected in the roadmap to universal health care financing formulated by the MOH in 2008, a Prime Minister’s Decree on the establishment of a NHIF which is being drafted and the HFS(Health Financing Strategy 2010-2015). Regarding the extension of social health protection coverage the targets of which are ‘50% of the population by 2015’ and ‘100% by 2020’, some challenges remain i.e. the fact that informal economy represents 80% of the total population; the extensive nature of poverty in rural and remote locations (and the general lack of cash economy). Therefore, a new approach to extending coverage in rural areas will probably need to be carefully designed and implemented. It will most probably be based on a mandatory coverage principle with highly subsidized premiums for the poor and the informal economy workers.