Stewardship (oversight)

1. Health Financing Overview Ke XuHealth Systems FinancingWorld Health OrganizationDecember, 2007Shanghai Better Financing for Better Health

2. Stewardship (oversight) Responsiveness (the way people are treated and the environment) Resource development Service delivery (provision) Health Financing (collecting, pooling and purchasing) Functions and Goals of Health System GOALS / OUTCOMES OF THE SYSTEM FUNCTIONS THE SYSTEM PERFORMS I N P U T S Quality Coverage Fairness in financial contribution Efficiency Better Financing for Better Health

3. Purposeof Health Financing • Make funds available • Set correct incentives for providers • Ensure access to care for all individuals Better Financing for Better Health

4. Health Financing Mechanisms Financing mechanisms Financing sources Tax-based financing 1. General tax or other revenue External resource 2. Payroll tax Social health insurance Health care services Household Other prepayment schemes 3. Contribution or premium Natural resource revenue Out-of-pocket payments 4. Direct payment Better Financing for Better Health

5. Health Financing Functions Purchasing • What to buy? • benefit package • From whom to buy? • Public/private, • provide directly purchasing) • How to buy them? • contracting, • provider payment mechanisms Revenue collection • From whom? • Patients or all population • What approaches? • Equity issue Pooling • Cross subsidies • Income groups • Pooling • Low risk and high risk Better Financing for Better Health

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. Better Financing for Better Health

7. Social 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 Better Financing for Better Health

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 Better Financing for Better Health

9. Tax-based Financing - Purchasing What services? • Health prevention • MCH • Essential treatment & drugs 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 Better Financing for Better Health

10. By Pia Schneider: Provider Payment Reforms: Lessons from Europe and America for South Eastern Europe Better Financing for Better Health

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. Better Financing for Better Health

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 Better Financing for Better Health

13. 150 million people suffering financial catastrophe and 100 million people being pushed into poverty annually due to health spending Better Financing for Better Health

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 Better Financing for Better Health

15. Approaches of Financing in Practice by Income Better Financing for Better Health

16. low income countries 100 90 80 70 60 percentage (%) 50 40 30 20 10 0 GIN COD TJK BDI IND PAK KHM GHA NGA NPL TGO CIV KGZ BGD CAF TCD YEM SEN SDN ERI UZB VNM BFA BEN KEN NIC LAO AFG COM MDA GNB HTI LBR NER SLE GMB MLI UGA ZWE TZA MDG ZMB MNG ETH MWI RWA MRT BTN STP MOZ PNG PRK KIR TLS LSO SLB oop_the other_the ssh_the tax_the Components of Total Health Expenditure (2003) Better Financing for Better Health

17. high income countries 100 90 80 70 60 percentage (%) 50 40 30 20 10 0 MMR SGP CYP GRC KOR CHE PRT ISR BRB ESP QAT AND AUS BEL BHS ITA SMR MCO KWT BRN AUT FIN BHR MLT ARE JPN ISL DNK NZL NOR CAN SWE USA IRL GBR DEU FRA SVN NLD LUX SOM oop_the other_the ssh_the tax_the Components of Total Health Expenditure (2003) Better Financing for Better Health

18. Proportion of households with catastrophic expenditures vs. share of out-of-pocket payment in total health expenditure 15 8 3 1 % of households with catastrophic expenditure (logarithm) .3 .1 .03 .01 3 5 8 14 22 37 61 100 out-of-pocket payment in total health expenditure % (logarithm) OECD others Better Financing for Better Health

19. Funds Available for Health Are ScareTotal health spending per capita 2002 Better Financing for Better Health

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 Better Financing for Better Health

21. Stages of Coverage and Organisational Mechanisms Universal Coverage Increase prepayment • Tax-based financing • Social health insurance • Mix of tax-based and various types of health insurance Intermediate stages of coverage Mixes of community cooperative and enterprise based health insurance, other private health insurance, SHI type coverage for specific groups and limited tax based financing Reduceout-of-pocket payments Absence of financial protection Out-of-pocket spending for health care Better Financing for Better Health

22. Universal Coverage • 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 Better Financing for Better Health

23. Thank you!http://www.who.int/health_financing Better Financing for Better Health