HEALTH FINANCING

Dr. Jamelah R. Usman-Pasagi

HEALTH FINANCING Health financing is concerned with how financial

resources are generated, allocated and used in health systems.

Health financing policy focuses on how to move closer to universal coverage with issues related to:i. how and from where to raise sufficient funds for

health;ii. how to overcome financial barriers that exclude

many poor from accessing health services; or iii. how to provide an equitable and efficient mix of

health services

FUNCTIONS

REVENUE GENERATION RISK POOLING

PURCHASING

WHAT IS CATASTROPHIC

HEALTH SPENDING?

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It is defined as spending more than

40% of the household income after basic subsistence needs

have been met.

GENERAL MODELS OF HEALTH SYSTEM FINANCING

TAX BASED FUNDED

SOCIAL HEALTH

INSURANCE FUNDED

OUT OF POCKET SYSTEM

GOVERNMENT

SUBSIDIZED NATIONAL HEALTH

INSURANCE

[ The UK National Health Service (NHS)/ The

Cuban Model]

[ The German Bismarckian Model]

[ The Canadian Model]

[ The US Model]

Pooled together and provide protection against catastrophic health expenditures and impoverishment.

Pools the risk, at most , only at the household level and provides the least financial protection against catastrophic health expenditure and impoverishment, aside form excluding those who have subsistence earning

THE ISSUESDrag picture to placeholder or click icon to add

1 Divergent health financing philosophy among the major health stakeholders and government administrations.

2 The chronic underfunding of the health system

3 Inequitable sourcing of funding for health

4 Efficiency issues

HEALTH FINANCING PHILOSOPHY

Basic to Universal Health Care is the premise that health is both a human right and a constitutional right.

As a right, health and universal access to health care become primarily the government’s responsibility.

Health as a right means that ALL Filipinos have the right to health care first as human beings and second as citizens and not because of Philhealth’s capacity or incapacity to enroll them.

HEALTH FINANCING PHILOSOPHY

A well-regulated private sector can, and should be encouraged to contribute to the attainment of Universal Health Care.

Health and health care services should not be viewed merely as a cost; rather they should be seen as a necessary investment.

The goal of Universal Health Care is to abolish disparities in health status among population groups, among income groups, among regions within the country.

WHAT IS UNIVERSAL HEALTH CARE?

Universal coverage (UC), or universal health coverage (UHC)-is defined as ensuring that all people can use the promotive, preventive, curative, rehabilitative and palliative health services they need, of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship

OBJECTIVES OF UHC

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equity in access to health services - those who need the services should get them, not only those who can pay for them;that the quality of health services is good enough to improve the health of those receiving services; andfinancial-risk protection - ensuring that the cost of using care does not put people at risk of financial hardship.

PATH TO UNIVERSAL COVERAGE

ABSENCE OF FINANCIAL

PROTECTION

INTERMEDIATE STAGES OF COVERAGE

UNIVERSAL COVERAGE

Health expenditure dominated by out-of-pocket spending

Mixes of community

cooperative- and enterprise-based health insurance,

social health insurance-type coverage for

specific groups and limited tax-based financing

Tax-based financing

Social health insurance

Mix of tax-based and social health

insurance

PATH TO UNIVERSAL COVERAGE

TAX-BASED vs. SOCIAL HEALTH INSURANCE REVENUE GENERATION FOR FINANCING UHC

UHC thru taxes ADVANTAGEs:

1 Burden of contribution is more progressive

2 Incurs less administrative costs

3 Coverage is by virtue of citizenship or residence

UHC thru Social Health Insurance

(SHI) DISADVANTAGEs

1. Higher administrative costs

2. Coverage is dependent on identification, enrollment and collection of premiums.

3. SHI premium contributions are less progressive than income tax payments

TAX-BASED vs. SOCIAL HEALTH INSURANCE REVENUE GENERATION FOR FINANCING UHC

UHC thru taxes DISADVANTAGEs:

1. Tax revenues generally go to the general appropriations and the government health agency has to compete with the other government agencies for the appropriate budgetary allocation for health.

UHC thru Social Health Insurance

(SHI) ADVANTAGEs

1. Funds raised through SHI are earmarked for health

2. The SHI funds represent additional revenues for health

UNDERFUNDING and SOURCE OF FUNDING

Evidence within Asia Pacific Region (37 countries of the WHO Western Pacific Region and 11 countries of the WHO South-East Asia Region) suggests that countries whose governments spend less than 5% of GDP on health had higher percentage of households with catastrophic health expenditures.

FIG1

APPP1

UNDERFUNDING and SOURCE OF FUNDING

Regional data also suggests that countries with greater than 30% OOP health expenditures had higher percentage of households with catastrophic expenditures and consequent impoverishment.

The major source of health care financing in most countries of the region was out-of-pocket (OOP) payments.

UNDERFUNDING and SOURCE OF FUNDING

App2

UNDERFUNDING and SOURCE OF FUNDING

UNDERFUNDING: THE SOLUTION

Health revenues can be increased in the region “by:

1. increasing domestic tax revenues,2. expanding the tax base,3. developing social health insurance, 4. borrowing externally, or 5. seeking debt repayment relief.”

EFFICIENCY ISSUES

ALLOCATIVE EFFICIENCY

PAYMENT MECHANISM

FRAGMENTATION AND OVERLAP OF THE DIFFERENT

FINANCING INSTITUTIONS

EFFICIENCY ISSUES ALLOCATIVE EFFICIENCY: spending the limited

health resources on expensive tertiary health care versus the more cost effective primary and preventive health care.

PAYMENT MECHANISMS: the dominance of the inefficient fee-for-service payment mechanism

FRAGMENTATION AND OVERLAP OF THE DIFFERENT FINANCING INSTITUTIONS with Philhealth seemingly acting independently of the DOH

ALLOCATIVE EFFICIENCY

FIG 2

PAYMENT MECHANISM

COMMON METHODS

1. Fee-for-service

2. Salaries

3. Case Payments

4. Capitation

5. Global Budgets

MAIN PROVIDER IN ASIA PACIFIC

REGION1. Budget Allocations

2. Salaries

3. Fee-for-service

FEE-FOR-SERVICE -a payment mechanism where the provider is paid for every service provided, usually at the time of service.

FRAGMENTED HEALTH FINANCING SYSTEM AND OVERLAPPING OF FINANCING AGENT

Government health spending is fragmented among hundreds of stakeholders:1. DOH2. LGUs3. Philhealth,

Each with different health financing philosophies, mandates and responsibilities.

The DOH finances retained hospitals and national health programs.

The LGU (with 81 provinces, 136 cities and 1,495 municipalities) use their internal revenue allotments to finance their health facilities and services. The provinces finance the provincial and district hospital

hospitals. Municipalities are in charge mainly of public health and

primary care. PhilHealth pays for services of DOH, LGUs and private

health facilities.

FRAGMENTED HEALTH FINANCING SYSTEM AND OVERLAPPING OF FINANCING AGENT

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THANK YOU.