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CAPACITY DEVELOPMENT WORKSHOP ON HEALTH SYSTEM DEVELOPMENT FOR REGIONAL COUNTRY OFFICE STAFF Health Care Financing Functions and Options PowerPoint PPT Presentation


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CAPACITY DEVELOPMENT WORKSHOP ON HEALTH SYSTEM DEVELOPMENT FOR REGIONAL COUNTRY OFFICE STAFF Health Care Financing Functions and Options. Eastern Mediterranean Regional Office, World Health Organization Dr. Hossein Salehi May 20-24, 2007 Alexandria, Egypt. Introduction; Health spending.

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CAPACITY DEVELOPMENT WORKSHOP ON HEALTH SYSTEM DEVELOPMENT FOR REGIONAL COUNTRY OFFICE STAFF Health Care Financing Functions and Options

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CAPACITY DEVELOPMENT WORKSHOP ON HEALTH SYSTEM DEVELOPMENT FOR REGIONAL COUNTRY OFFICE STAFFHealth Care Financing Functions and Options

Eastern Mediterranean Regional Office,

World Health Organization

Dr. Hossein Salehi

May 20-24, 2007

Alexandria, Egypt


Introduction health spending l.jpg

Introduction; Health spending

  • Spending on health has been increasing world-wide including in EMR

  • Advances in medical technology, higher population and providers’ expectations, income growth, health system development are some determinants

  • Increased inequalities in health spending between and within countries

  • Health care financing is at the center of most health policy reforms


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Why Health Care Financing?

  • Financial resource generation

  • Economic efficiency

    • Allocative efficiency…producing the right things

    • Technical efficiency…producing things right

  • Social protection

  • Equity

    • Horizontal equity

    • Vertical equity


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HEALTH SYSTEM CONCEPTUAL FRAMEWORK

Social Determinants of Health

SYSTEM BUILDING BLOCKS

GOALS OF HEALTH SYSTEM

Responsiveness

Information Support

Service Delivery

Coverage

Leadership & governance

Provider performance

Health workforce

Health

Financing

Quality & Safety

Health technology

Efficiency

Financial protection

Equity


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HEALTH SYSTEM CONCEPTUAL FRAMEWORK

  • Healthcare Financing

  • Collection

  • Pooling

  • Purchasing

Social Determinants of Health

SYSTEM BUILDING BLOCKS

GOALS OF HEALTH SYSTEM

Responsiveness

Information Support

Service Delivery

Coverage

Leadership & governance

Provider performance

Health workforce

Health

Financing

Quality & Safety

Health technology

Efficiency

Financial protection

Equity


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Functions

Objectives

raise sufficient and sustainable revenues in an efficient and equitable manner to provide individuals with both a basic package of essential services and financial protection against unpredictable catastrophic financial losses caused by illness and injury

Revenue Collection

manage these revenues to equitably and efficiently pool health risks allowing for subsidies from healthy to unhealthy, rich to poor, and productive workers to dependents

Pooling

Purchasing

assure the purchase of health services is strategic and both allocatively and technically efficient (for whom to buy, what services to buy, from who to buy, and how to pay)


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Functions and Key Issues of the Health System


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Modalities of Health Financing Systems


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NATIONAL HEALTH SERVICE (e.g. UK,Scandinavian Countries, GCC countries)

HEALTH SYSTEM MODELS

Provincial / Regional Government Single Payer System (e.g., Canada, Spain)

SOCIAL HEALTH INSURANCE – Bismarckian System (e.g., Germany, Japan)

Voluntary Private Insurance Model (e.g., US)

  • Direct payment (out-of-pocket) at point of service

  • ( e.g., prevailing system in most low income countries)

MIXEDSYSTEM

Micro Insurance


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Share of out-of-pocket

expenditure (%)- 2004

Per capita total health

expenditure (US$)- 2004

Source: WHO NHA Website


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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


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Households with catastrophic expenditures and impoverishment

5

4

3

% of households impoverished

2

1

0

0

3

6

9

12

15

% of households with catastrophic expenditure


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Catastrophic health expenditure and impoverishment 1995–2002; I.R. Iran

  • Reduce expenditures on other basic needs

  • Push some households into poverty

  • May cause consumers to forgo health services and suffer illness

Catastrophic health expenditures


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Strengths

Pools risks for whole population

Relies on many different revenue sources

Single centralized governance system has the potential for administrative efficiency and cost control

Weaknesses

Unstable funding due to nuances of annual budget process

Often disproportionately benefits the rich

Potentially inefficient due to lack of incentives and effective public sector management

NHS SystemsFinanced through general revenues, covering whole population, care provided through public providers or contracting


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Strengths

Additional health revenue source

As a ‘benefit’ tax, there may be more ‘willingness to pay’

Removes financing from annual general government appropriations process

Generally provides covered population with access to a broad package of services

Can effectively redistribute between high and low risk and high and low income groups in covered population

Often serves as the basis for the expansion to universal coverage

Weaknesses

Poor are often excluded unless subsidized by government

Potential negative impact on employment

Administrative cost can be high

Can lead to cost escalation unless effective contracting mechanisms are in place

Poor coverage for preventive services

Often needs to be subsidized from general revenues

Social Health InsurancePublicly mandated for specific groups, financed through payroll taxes, semi-autonomous administration, care provided through own, public, or private facilities


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Strengths

Community-run and not-for-profit

Promotes pre-payment

Mobilizing additional resources, providing access and financial protection in LICs

CBHI can be a helpful complement but is not a substitute for NHS or SHI systems

Weaknesses

Difficult to scale up

Financial protection are limited due to the small size of most schemes

The financial sustainability of most schemes is questionable

Should be encouraged when alternatives are not viable

Community Based Health InsuranceNot-for-profit prepayment plans for health care, with community control and voluntary membership, care generally provided through NGO or private facilities


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Strengths

As a prepayment and risk pooling mechanism is generally preferable to out of pocket expenditure

May increase financial protection and access to health services for those able to pay

When an “strategic purchasing” function is present it may also encourage better quality and cost-efficiency of health care providers

Weaknesses

Associated with high administrative costs and profit (up to 40%)

It is generally inequitable

Applicability in LICs and MICs requires well developed financial markets and strong regulatory capacity

Has the potential to divert resources and support from mandated health financing mechanisms

Private Health InsuranceFinanced through private voluntary contributions to for- and non-profit insurance organizations, care reimbursed in private and public facilities


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Financing & Provision of health care; Who pays? Who provides?

Provision

Public

Private

  • Public Financing & Private Provision

  • Solidarity in financing

  • Competition and Choice in provision

Public

Financing

Private


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Fiscal space:

Availability of budgetary room that allows a government to provide resources for a desired program

Exists when a government can increase expenditures without impairing its fiscal solvency

Fiscal space can be created by:

tax measures and better administration

reducing lower priority expenditures

borrowing domestically or externally

seignorage

grants

Fiscal Space is Needed to Scale Up Spending


Alternative health care financing states responsibilities regardless of the choice of hcf model l.jpg

Alternative health care financing;States’ responsibilities regardless of the choice of HCF model

  • Adherence to the principle of health for all and recognition of health as citizens’ rights

  • Governance (stewardship) of health system

  • Financing and provision of public health programmes including all preventive, environmental and promotional health interventions


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Transition towards universal coverage

Public spending

Majority of population

Covered through:

Government revenue

funded programme

and/or

Social health insurance

Private spending

1. Limited social

health insurance for

civil servants

2. Public

Programmes for

vulnerable groups

Limited

Governmentfunded

programmes

Direct

payment at

the point of

services

1. Direct payment at

the point of service

2. Limited private

health insurance

Private health insurance

Provides supplementary

coverage


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CAPACITY DEVELOPMENT WORKSHOP ON HEALTH SYSTEM DEVELOPMENT FOR REGIONAL COUNTRY OFFICE STAFFHealth Care Financing Functions and Options

Eastern Mediterranean Regional Office,

World Health Organization

Dr. Hossein Salehi

May 20-24, 2007

Alexandria, Egypt


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Fund Collection Indicators


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Pooling Indicators


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Purchasing Indicators


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