Stewardship (oversight)

Better Financing for Better HealthBetter Financing for Better Health

1

Health Financing Overview Health Financing Overview

Ke XuHealth Systems FinancingWorld Health Organization

December, 2007Shanghai


2

Stewardship(oversight)

Financing (collecting, pooling

and purchasing)

FUNCTIONS THE SYSTEM PERFORMS GOALS / OUTCOMES OF THE SYSTEM

Health

Fairness in financial

contribution

Responsiveness (the way people are

treated and the environment)Resource

development

Service delivery(provision)

Functions and Goals of Health System

I

N

P

U

T

S

Coverage

Efficiency

Quality


3

Purpose of Health Financing

• Make funds available• Set correct incentives for

providers• Ensure access to care for all

individuals


4

Health Financing Mechanisms

Health care services

Tax-based financing

Social health insurance

Other prepayment

schemes

Out-of-pocket payments

1. General tax or other revenue

2. Payroll tax

3. Contribution or premium

4. Direct payment

Household

External resource

Financing mechanisms

Financing sources

Natural resource revenue


5

Health Financing Functions

Revenue collection• From whom?

– Patients or all population

• What approaches?• Equity issue

Pooling• Cross subsidies

– Income groups• Pooling

– Low risk and high risk

Purchasing• What to buy?

– benefit package

• From whom to buy? – Public/private, – provide directly

purchasing)

• How to buy them? – contracting, – provider payment

mechanisms


6

Government Health Financing Approaches

• The two approaches: – tax-based financing – social health insurance

• May co-exist in a given system.• Each has its typical ways of fund

raising pooling and purchasing.• However, in practice they share some

common methods to fulfil financing functions.


7Social Health InsuranceHealth Financing Functions

• Revenue collection– Compulsory membership- often, formal sector

employees (dependants)– Payroll tax-proportional to income (ceilings often

applied) shared by employee and employer– Government subsidies

•Disadvantaged population (premium)•Low price service in public facilities

• Pooling– Single pool /multiple pools– Cross subsidy between high and low income

groups, the healthy and unhealthy• Purchasing /providing services


8

Tax-based Financing- Revenue Collection

• General tax (central and local levels)– Direct tax

• Individual income tax• Corporate income tax• Property tax

– Indirect tax• VAT/sales tax, • Excise duties• Import & export tax

– Other tax

• Government property revenue– Natural resources

• Oil, diamond, other natural resources

– Government-owned property

• External resources– Bilateral– Multilateral– NGOs


9

What services?• Health prevention• MCH• Essential treatment &

drugs

Tax-based Financing - Purchasing

For whom?• All population• Poor & other

vulnerable• Mother & child

Methods of purchase?• Direct provision

through public facilities• Increased use of

contracting

Incentives for providers?• Medical staff are paid by

salary or a mix of payment methods

• Facilities are mainly funded through a budget


10

By Pia Schneider: Provider Payment Reforms: Lessons from Europe and America for South Eastern Europe


11

Social Health Insurance or Tax-based System?

• No evidence indicating relative superiority of tax-based versus social health insurance financing approaches.

• The two approaches may co-exist in a given system.

• Each has its typical ways of fund raising pooling and purchasing. However, in practice they share some common methods to fulfil financing functions.


12

Challenges for Developing Countries -1-

• 150 million people face financing catastrophe

• 100 million people are pushed under the poverty line

• Even more people do not have access to effective and affordable health care


13150 million people suffering financial catastrophe and 100 million people being pushed into poverty annually due to health spending

- 30,000 60,000 90,000

WPR

AMR

SEA

EUR

AFR

EMR

Number of people (1,000)

impoverishment

catastrophic


14

Challenges for Developing Countries -2-

•Most developing countries rely heavily on out-of-pocket payment

•Government spending is insufficient and decreasing in some countries

•Voluntary based private prepayment schemes are in very small scales

•External resources are increasing, but still limited

•Funds available for health are scare and not always used efficiently

•Per capita THE<$50: 65 countries


15

Approaches of Financing in Practice by Income

0%

20%

40%

60%

80%

100%

low lowmid

uppermid

high total

Mixed

SSH

Tax

OOP


16

010

2030

4050

6070

8090

100

perc

enta

ge

(%)

GINCODTJKBDIINDPAKKHMGHANGANPLTGOCIVKGZBGDCAFTCDYEMSENSDNERIUZBVNMBFABENKENNICLAOAFGCOMMDAGNBHTILBRNERSLEGMBMLIUGAZWETZAMDGZMBMNGETHMWIRWAMRTBTNSTPMOZPNGPRKKIRTLSLSOSLB

low income countries

oop_the other_the ssh_the tax_the

Components of Total Health Expenditure (2003)


17

Components of Total Health Expenditure (2003)

010

2030

4050

6070

8090

100

pe

rce

nta

ge

(%

)

MMRSGPCYPGRCKORCHEPRTISRBRBESPQATANDAUSBELBHSITASMRMCOKWTBRNAUTFINBHRMLTAREJPNISLDNKNZLNORCANSWEUSAIRLGBRDEUFRASVNNLDLUXSOM

high income countries

oop_the other_the ssh_the tax_the


18

.01

.03

.1.3

13

815

% o

f ho

useh

old

s w

ith c

atas

trop

hic

expe

nditu

re (

log

arith

m)

3 5 8 14 22 37 61 100

out-of-pocket payment in total health expenditure % (logarithm)

OECD others

Proportion of households with catastrophic expenditures vs.share of out-of-pocket payment in total health expenditure


19

Funds Available for Health Are Scare

Total health spending per capita 2002

AFR Global<10$ 10 1410-20$ 17 2520-50$ 8 2850-100$ 5 27>100$ 6 98Total 46 192


20

Strategies

• Raise More Funds and Spend Efficiently • Reduce Out-of-pocket Payments and

Increase Prepayment• Strengthen Health Financing Function

– Collect financial contributions efficiently and fairly

– Pool these contributions so that the risk of having to pay for care is shared by all

– Purchase or provide health service effectively and ensure an efficient provider-payment system


21

Out-of-pocket spending

for health care

Mixes of community cooperative and enterprise based health insurance, other private health insurance, SHI type coverage for specific groups and limited tax based financing

Absence of financial protection

Intermediate stages of coverage

Universal Coverage

•Tax-based financing

•Social health insurance

•Mix of tax-based and various types of health insurance

Incr

ease

prepaym

ent

Stages of Coverage and Organisational Mechanisms

Reduce

out-of-p

ocket p

ayments


22

• All people should have access to essential interventions when needed

• Without the risks of financial catastrophe or impoverishment

Resolution "Sustainable Health Financing, Universal Coverage and Social Health Insurance" May 2005.

Geneva

Universal CoverageUniversal Coverage


23

Thank you!

http://www.who.int/health_financing

Documents

Stewardship (oversight)