HEALTH FINANCING OVERVIEW

Introduction
• Health spending and Health goals
• National Health Accounts
• Five sources of Financing the health sector
• Equity issues of modes of health care
financing
 Health spending and Health goals

• How much are we spending in health care?

• Does it reflect the health needs of the
population?
• Health needs – Burden of Diseases ( BOD)
• BOD- Gap between current health status and
an ideal situation where everyone lives untill
old age free of diseases or disbility
• Why such a gap?
– Premature motality
– Disability
– Exposure to risk factors that contribute to illnesses
• Quality of life years( QUALY)
• Assesment of costfeffectiveness of interventions to
improve the life years lived with a quality health status
• Disability Adjusted Life Years (DALY)
– Assesment of cost effectiveness of interventions and make
evidence driven decisions about how to allocate funds to
improve population health
• There are disparities between countries
• Poor countries- high share of BOD, low share of health
spending
• Rich countries –low share of BOD, high share of health
spending
 Health spending
• Accurate measure of health spending is
complicated
• Many developing countries do not have a
systematic way of compiling health spending
data
• One way that is gaining popularity –
NATIONAL HEALTH ACCOUNTS (NHA)
• Health systems are becoming more complex,
there is a need of such tools
• How much should a country spend on Health?
• Easy to ask, hard to answer
– Epidemiological status of a country
– Health goals of a country
– Fiscal capacities of a country
• Willingness to shift money between sectors
• Collecting through various modalities
• Contextual
 Functions of Health Financing
system
• Resource mobilization
• Risk pooling
• Resource allocation ( Payment mechanisms)
 Resource mobilization
• Mechanisms for collecting money to be spend on
health
– General revenue
• Taxes that feed into the budget of the country
– Insurance schemes
• Social ( Government run-mandatory) or private insurance
(Voluntary)
– Community financing
• Community health insurance schemes/ sickness funds
– Out of pocket expenditure
– External source of funding
 Risk pooling
• Collection and management of financial
resources in a way to spread risks from an
individual to all pool members
• Financial risk pools – Core functions of health
insurance
• Financial protection – ie. Avoid direct
payments at the moment of utilizing care (
encourage pre-payment)
 Resource allocation
• Use the mobilized or pooled resources to pay
service providers
• Which organisation to pay?
• What to pay them for?
• How much to pay them?
 Ways to pay health providers
• Fee For Service
• Salary (and Bonuses)
• Capitation
• Per-diems
• Diagnostic related groups ( DRGs)
• Budgets ( Line-Item or Global )
 EQUITY ISSUES
• Equity and General revenue
– Depends on tax system – Propotional ( full indexed to
income) , Progressive ( rich more tha poor – vertical
equity) and regressive ( poor more than the rich)
• Equity and Social Health Insurance
– Horizontal equity jeopadized if there is premium
evation, but also if there are many sickness funds with
different premiums
• Equity and Private Health insurance
– Unfavourable
• Equity and community financing
– Diverse, difficult to make a definite conclusion
• Equity and out of pocket
– Regressive
• Equity and donor funding
– Depends on donor aims
• Questions & Answers