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Financing Health Care and Economic Issues

Financing Health Care and Economic Issues. Overview and Objectives. 7 weeks of GH 511 – Where are we now? A message on health systems strengthening… History of health policy, economic policies, and aid for health Elements of health care reform

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Financing Health Care and Economic Issues

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  1. Financing Health Care and Economic Issues

  2. Overview and Objectives • 7 weeks of GH 511 – Where are we now? • A message on health systems strengthening… • History of health policy, economic policies, and aid for health • Elements of health care reform • 3 health financing functions with specific focus on revenue collection • Share your perspectives and experiences

  3. Your Experiences with Health Care Reform and Financing • What different types are used in the countries where you have been? • How have they worked? • Challenges with implementation? Need MONEY and PEOPLE who know how to LEAD and MANAAGE

  4. Determinants of Global Health Underlying Intermediate Proximate Diseases Interests of rich Status of women Land tenure Debt-SAPs Weak governments Militarism Imperialism Poverty Disparity Access to education Job conditions Gender issues Civil strife Malnutrition Water Sanitation Housing Health care services Health behaviors Diarrhea Pneumonia Perinatal conditions HIV Injury Malaria Measles Global and national National and community Family Individual

  5. Health Care Systems • Complex systems consisting of: • Health care consumers = people in need of health care services • Health care providers = people who deliver health care • Systematic arrangements for delivering health care = public and private agencies that organize, plan, regulate, finance, coordinate services Health care can be “catastrophically costly” and need can be unpredictable

  6. Six Building Blocks of a Health System System Inputs Overall Goals/Outcomes Source: Strengthening Health Systems to Improve Health Outcomes, WHO’s Framework for Action – WHO 2007

  7. 5 Fundamental Questions • What are the boundaries of health systems? • What are health systems for? • How do we characterize the architecture of a health system? • How can we tell when a health system is performing well? • How do we relate architecture to health system performance?

  8. Six Building Blocks of a Health System Purposeful change aimed at improving health system performance for: System Inputs Source: Strengthening Health Systems to Improve Health Outcomes, WHO’s Framework for Action – WHO 2007

  9. What do we mean by health systems that are... Equitable? • Ability-to-pay determines financing contributions • Use of services is based on need for care Efficient? • How well a health system achieves the desired health outcome given available resources Responsive? • Protects one’s dignity and autonomy Able to offer social and financial protection?

  10. History of Health Care Reform 1970s: Primary Health Care as Health Care Reform 1980s: Structural Adjustment Programs - reduction of public budgets, global concern about health care • Bamako Initiative • USAID Health Care Reform initiatives • Privatization 1993: World Bank – Investing in Health What’s next?

  11. Chronology of Policies 1945 1955 1965 1975 1985 1995 2005 WB Health Sector Reform (1978) Alma Ata Health Policies PHC and Selective PHC Equity Oriented Strategies Structural Adjustment Programs Debt & SAPs Debt Crisis (2000) World Health Report & MDGs IMF & World Bank PEPFAR • USAID – Family Planning • Disease-specific funding Aid for Health GFATM, GAVI Child Survival Foundation $$ 1945 1955 1965 1975 1985 1995 2005

  12. Challenges to Scale Up Services Source: WHO expert consultation on “Positive Synergies Between Health Systems and Global Health Initiatives (GHIs)” – May 2008

  13. Reform & Financing Caveats

  14. Ideology – Based on Market Principles (1990s - World Bank)

  15. Typical Components of Health Care Reform

  16. 58th World Health Assembly (2005) • Adopted the resolution 58.33 on “Sustainable health financing, universal coverage and social health insurance:” • Urges WHO’s member states to: • Ensure that health financing systems include prepayment and risk sharing mechanisms; • Avoid catastrophic health-care expenditure; • Work towards universal coverage = secure access for all to appropriate preventive, curative and rehabilitative services at an affordable cost Source: Carrin G, Mathauer I, Xu K, Evans, B. Universal coverage of health services: tailoring its implementation, Bulletin of the WHO, November 2008, 86(11).

  17. What is Health Financing? • SCHEIBER, G. "Financing Health Systems" Chapter 12, pp 225-242 in Disease Control Priorities in Developing Countries, 2nd Edition. New York: Oxford University Press 2006.

  18. Health Financing Functions FBOs NGOs SCHEIBER, G. "Financing Health Systems" Chapter 12, pp 225-242 in Disease Control Priorities in Developing Countries, 2nd Edition. New York: Oxford University Press 2006.

  19. 3 Health Financing Functions • Revenue collection: • Process by which the health system receives money • Pooling of resources: • Accumulation and management of revenues to share financial risk associated with health interventions • Prepayment allows pool members to pay in advance, relieves uncertainty and provides access to compensation if a loss occurs • Purchasing: • Mechanisms used to purchase and provide services from public and private providers

  20. 3 Health Financing Functions • Raise sufficient and sustainable revenues in an efficient and equitable manner to provide: • Basic package of essential services • Financial protection against financial loss due to illness or injury • Managing revenues to equitably and efficiently pool health risks • Ensuring the purchase of health services in an allocatively and technically efficient manner SCHEIBER, G. "Financing Health Systems" Chapter 12, pp 225-242 in Disease Control Priorities in Developing Countries, 2nd Edition. New York: Oxford University Press 2006.

  21. Fiscal Sustainability SCHEIBER, G. "Financing Health Systems" Chapter 12, pp 225-242 in Disease Control Priorities in Developing Countries, 2nd Edition. New York: Oxford University Press 2006.

  22. Domestic Resources for Health Care in Lower-Income Countries (LICs) Source: WHO expert consultation on “Positive Synergies Between Health Systems and Global Health Initiatives (GHIs)” – May 2008

  23. Health Outcomes and Health Spending Infant Mortality Rate vs. Total Spending per Capita Source: World Development Indicators, 2007

  24. Pure Private Goods Cosmetic surgery Open heart surgery Curative Kidney dialysis VIP IP care 2nd class IP care OP hospital self-referrals OP hospital referrals Actual funding ends up here Health center OP curative Family Planning Maternal and Child Health Preventive Vector control Environmental sanitation Water supply Pure Public Goods Government policy dictates most resources flow here Public Finance Challenge Poor Rich Pop IV Project

  25. Health Care Spending in Ghana 85%

  26. Pure Private Goods Cosmetic surgery Open heart surgery Curative Kidney dialysis VIP IP care 2nd class IP care OP hospital self-referrals BASIC PACKAGE $34/p/year OP hospital referrals Health center OP curative Family Planning Maternal and Child Health Preventive Vector control Environmental sanitation Water supply Pure Public Goods Selection of Services to be Financed The poor The rich Pop IV Project

  27. Sub-Saharan Africa Expenditures on Health (1997-2000) Recommended expenditure: >$34/capita (CMH) Source: World Bank, World Development Report (2004)

  28. Health Financing Functions SCHEIBER, G. "Financing Health Systems" Chapter 12, pp 225-242 in Disease Control Priorities in Developing Countries, 2nd Edition. New York: Oxford University Press 2006.

  29. Key Issues of Revenue Collection • Mobilize enough resources to finance expenditures for basic public and personal health services WITHOUT resorting to public sector borrowing (Tanzi and Zee 2000) • Raise revenues equitably and efficiently • Various types of organizations eventually receive funds • Conform with international standards SCHEIBER, G. "Financing Health Systems" Chapter 12, pp 225-242 in Disease Control Priorities in Developing Countries, 2nd Edition. New York: Oxford University Press 2006.

  30. Types of Revenue Collection • Out-of-pocket payments (ex. user fees) • Tax-based financing • Social Health Insurance (SHI) • Voluntary private insurance • Community-based financing Types of Prepayment Prepayment makes risk sharing possible…

  31. User Fees

  32. User Fees • Characteristics: • Pay as you go - no risk pooling • Incentive effects • More resources directly for health • Evidence: • Can raise significant revenue • Frequent misuse of collected funds • Frequent poor design and planning • Highly political and controversial Source: Lagarde, M and Palmer, N. The impact of user fees on health service utilization in low- and middle-income countries: how strong is the evidence? Bulletin of the WHO, November 2008, 86(11).

  33. General Taxation • Characteristics: • Usually collected by the Ministry of Finance – as main source of revenue and serves the general population. • Mobilizes funds from everyone regardless of their health status, income, or occupation • Pools health risks across a large contributing population • Evidence: • Mildly regressive to progressive • Inequitable access for the poor • Reducing individual responsibility for one's own health? Source: Tax Based Financing for Health Systems: Options and Experiences, Discussion Paper #4, World Health Organization (2004).

  34. Social Health Insurance (SHI) • Characteristics: • Mandatory participation • Large risk pools • Social solidarity • Evidence: • Covers people primarily in formal sector • May increase disparities between income groups

  35. Voluntary Private Health Insurance • Characteristics: • Risk pooling • Payment based on ability and risk • Access based on payment • Evidence: • Generally not pro-poor • High-risk subscribers dropped or pay more • Rich capture more benefits

  36. Community-Based Financing • Bamako Initiative (1987) = “Women and children’s health through funding and management of essential drugs at the community level” • Characteristics: • Start up funds for basic equipment, provision of basic drugs, support costs • Drug charges to recover expenditures – as seed capital and for replenishment • Community health committees

  37. Health Financing Functions SCHEIBER, G. "Financing Health Systems" Chapter 12, pp 225-242 in Disease Control Priorities in Developing Countries, 2nd Edition. New York: Oxford University Press 2006.

  38. Pooling and Purchasing

  39. New Health Care Reforms? • Changing role, size, spending in public sector • Transfer of responsibility to, promote expansion of and regulate NGO services • Addressing the nearly universal difference between policies and actual expenditure • Integration of services (IMCI, IMAI, IMPAC) • Operations (health systems) research

  40. Community-Based Health Insurance (CBHI) • Principles: • Small risk pools • Social solidarity on small scale • Evidence: • Can enhance financial access to limited care • Primarily curative oriented • Geographic inequities (closer is better) • Government’s re-distributive role important • Generally failed to meet expectations

  41. CBHI Evidence Base General: • evidence base is limited in scope and questionable in quality • the effects are small and schemes serve only a limited section of the population Specifics: • strong evidence CBHI provides some financial protection by reducing out-of-pocket spending • moderate strength evidence that such schemes improve cost-recovery. • no evidence that schemes have an effect on the quality of care or the efficiency with which care is produced • these types of community financing arrangements are, at best, complementary to other more effective systems of health financing. • Regarding the costs and the benefits of various financing options, the current evidence base is mute on this point Ekman B. Health Policy Plan. 2004 Sep;19(5):249-70.

  42. Decentralization • Transfer of fiscal, administrative, and/or political authority for planning, management and service delivery to lower levels of government. • Most often done for reasons beyond health • One pure model does not exist

  43. Fiscal Decentralization Defines the: • Financial relations between national and sub-national units of government. • Authority to collect and use revenue • Direction and size of inter-governmental resource flows • Division of power for taxation • Means by which national resources are adjusted to match local expenditure responsibilities • How national resources flow to achieve equity

  44. Decentralization - Uganda * Source: Measure Project Akin, John, Paul Hutchinson and Koleman Strumpf “Decentralization and Government Provision of Public Goods: The Public Health Sector in Uganda” March 2001

  45. Your Experiences with Decentralization • Do local levels have resources that correspond to their increasing authority? • What are the impediments to effective management at a local level? • Has decentralization reduced corruption?

  46. Pure Private Goods Cosmetic surgery Open heart surgery Curative Kidney dialysis Tertiary IP care 2nd class IP care CBHI Schemes now OP hospital self-referrals BASIC PACKAGE OP hospital referrals Health center OP curative Family Planning Maternal and Child Health Preventive Vector control Environmental sanitation Water supply Pure Public Goods Where do CBHI schemes fit The poor The rich Pop IV Project

  47. Pure Private Goods Pure private provision + service contracts Public / private collaboration in curative service delivery Curative Self-financing Pre-pmt Schemes Subsidized pre-pmt Schemes SHI - public/private provision Preventive Pure Public Goods Financing: Filling the gaps Public provision & finance The poor The rich Pop IV Project

  48. Organizational Forms Ministry of health, usually heading a large network of public providers organized as a national health service, relying on general taxation – collected by the ministry of finance – as the main source of revenue, and serving the general population. Social security organization (single or multiple, competing or not), mostly relying on salary-related contributions, owning provider networks or purchasing from external providers, and serving mostly their own members (usually formal sector workers). Community or provider based pooling organization, usually comprising a small pooling/purchasing organization relying mostly on voluntary participation. Private health insurance fund (regulated or unregulated), mostly relying on voluntary contributions (premiums), which may be risk-related but are usually not income related, and are often contracted by an employer for all a firm’s employees.

  49. Health Care Reform • Not enough funds for basic care • Misallocation - 80% of resources tend to go toward richest 10% of population, urban/rural inequities. For example, surgery for cancers rather than FP, treatment of TB, STI. • Inequity - poor lack basic access to HCare • Inefficiency – in allocation of health workers, purchase of drugs • Inadequate recurrent budgets - lack of maintenance; logistic problems; poor quality services; low productivity, poor access • Little control over local resources – peripheral health facilities often have disproportionately low resources for population served

  50. Life Expectancy and Health Spending Source: World Development Indicators, 2007

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