functions of health financing

0000005125 00000 n A single pool maximizes the potential for risk pooling across the whole population. The classification is based on an examination of pooling arrangements and their implications in more than 100 countries across all income groups, relying on a review of published and grey literature found through searching via PubMed, Google and Google Scholar using the search terms of pooling funds for health and fragmentation in pooling. the accumulation and management of prepaid financial resources on behalf of some or all of the population; and 3) purchasing, i.e. There are some countries that rely predominantly on a single national pool funded from general government revenues. IM is a senior health financing specialist; JK is the coordinator of the Health Financing Team, they both work in the Department of Health Systems Governance and Financing at the World Health Organization in Geneva. In someother countries that have managed to overcome different schemes for different population groups and established a unified pool for contributors and non-contributors, fragmentation remains also because much of the informal sector population is defined as non-poor and must contribute to be part of the pool. The resources allocated to these different pools may come from a mix of centrally and sub-nationally raised revenues, with allocations often based on a consistent formula applied across the country. sicker individuals would have to pay more because they would need more health services [18]. Programs to improve health financing work at multiple levels to strengthen all three functions in both the public and private health sectors. !{~4nf0QMh92]Ta, *eIF Frenk J. Prakongsai P, Limwattananon S, Tangcharoensathien V. The equity impact of the universal coverage policy: lessons from Thailand. 0000001076 00000 n Explain the need for evidence pertaining to the cost of delivery of. 2014;16(1). Yet, the function of pooling and the different ways that countries organize this is critical for countries progress towards UHC. Health financing involves not only methods of raising money for health care, but also allocation of those funds. SMG 1117A.641 (02/09/2022) 1 . Figure 3.1 highlights these. Collectively, they work to meet the physical and mental health care needs of Australians. fragmented systems with voluntary health insurance, duplicating publicly financed coverage; and (8.) 0000006049 00000 n Health financing involves the basic functions of revenue collection, pooling of resources, and purchase of interventions. xref HGF guidance document no. Health Systems in Transition. State budget transfers to health insurance funds for universal health coverage: institutional design patterns and challenges of covering those outside the formal sector in eastern European high-income countries. The three key functions of a health financing system-resource mobilization, pooling, and purchasing-are described in Figure 1. 0000035307 00000 n The classification, such as the one we are proposing is simply meant to facilitate the reflecting around a response. These tend to reflect particular challenges due to the nature and consequences of fragmentation in each. 0000005327 00000 n the mobilization of resources for the health sector; 2) pooling, i.e. OECD, World Health Organization. Paris: OECD; 2011. Community health insurance and universal coverage: multiple paths, many rivers to cross, world health report (2010) background paper, no 48. This entity pools public funding, i.e. Global Health Expenditure Database: National Health Accounts [http://apps.who.int/nha/database (accessed on 1 September 2018)]. management and disbursement for financing the availment of a basic minimum package and other . Based on this, we identify and present broad types of pooling arrangements and related fragmentation issues and discuss implications and challenges. The report is divided into five chapters. World Health Organization. World Health Organization. But where territorially distinct pools are too small in terms of the number of people, their risk profile can be financially precarious and there could be efficiency and capacity concerns. When each level of government in a decentralized setting pools for a distinct level of health services, then it is organized in a territorially distinct way. To understand the key challenges to health systems. The UCS pooled together all of those revenues plus increased budget allocations. HSn0|lDP@bQlXdhe)o8NP*!}73H$8xKSY=5MfrjOj#]GIKz*=nE{/fw3A&/4`CJj+@K,*0'P2 mkgXEi{i5wD Jowett M, Brunal MP, Flores G, Cylus J. 0000012340 00000 n Improved equity in service use and financial protection involve expanding risk pooling, and as such pooling is a policy objective in itself. Cutler DM, Zeckhauser RJ. Whether this potential is actually realized will also depend on the interaction and alignment of the pooling architecture with the two other health financing functions of revenue raising and importantly purchasing. California Privacy Statement, Health Care Syst Transit. As such, this type of pooling arrangement, if and when it has an effective risk adjustment mechanism that deters risk selection efforts, can act as a virtual single pool (due to the flows between the pools). 0000002345 00000 n The three basic functions of any health financing system are revenue col-lection, risk pooling, and purchasing of services. Health Systems Financing: The path to universal coverage. 2023 BioMed Central Ltd unless otherwise stated. 2018;11(11). Conversely, schemes that have voluntary membership, i.e. "Health system financing is an essential component of UHC but progress toward UHC also requires coordinated actions across the pillars of the health system with particular attention to strengthening human resources for health." Health system financing health topic Department of Health Systems Governance and Financing, World Health Organization, Avenue Appia, 1211, Geneva, Switzerland, World Health Organization, Tunis, Tunisia, You can also search for this author in Mathauer I, Theisling M, Mathivet B, Vilcu I. voluntary contributions from beneficiaries, are prone to adverse selection: people with higher risks are more likely to enroll than people with lower health risks. Such a pool provides compulsory or automatic coverage for the entire population, usually for a defined package of services. Management has five main functions: planning, organising, leading, coordinating and control. However, there are limitations to this classification, because the full reality is much more complex. In practice, only a few countries have this pooling arrangement alongside a low share of out-of-pocket expenditure (OOP) (<20% of total health spending). While the issue of segmentation first emerged in Latin America [43], it is not limited to that region. Health Systems in Transition. As you know, there is a lot that you can find. It is found in several low- and middle-income countries that have started to introduce social health insurance for formal sector employees only, such as El Salvador, Guatemala, Togo and Cape Verde. The set of performance indicators provided in this article should help policy makers to monitor the development of social health insurance schemes and identify areas for improvement. https://doi.org/10.1093/heapol/czt054. The quest for universal health coverage: achieving social protection for all in Mexico. Health financing has three key functions: revenue collection, pooling of resources, and purchasing of services. Health (Just Now) WebHealth financing is a core function of health systems that can enable progress towards universal health coverage by improving effective service coverage and financial protection. Implementing health financing reform: lessons from countries in transition. On the other hand, competition among insurance pools creates an incentive for pool managers to cream skim, i.e. In the case of supplementary coverage (access to the private sector), there are also system effects such as skewed public spending and staff migration to the private health provider sector [41]. Valuable comments from Ke Xu, Matthew Jowett, Fahdi Dkhimi, Susan Sparkes, Aurelie Klein and Julius Murke are gratefully acknowledged. Kutzin J. Revenue collection is how health systems raise money from households, businesses, and external sources. Int J Equity Health. For example, district governments only pool for ambulatory care and district level hospitals, provinces for provincial hospitals, and the national government for high-level tertiary services. Article N4 %XyfL`P 8N-thZprq{H+B'xhOai@i ii`. 2xYai 5@IAZfL7|F0C(XQb1`\fn! Health nutrition and population discussion paper. xb```l hp`d,u){i7NY~GOC]TkT} h$*M^ixD#UNm| Purchasing refers to the allocation of pooled funds to healthcare providers for the delivery of health services on behalf of certain groups or the entire population. endstream endobj 168 0 obj<>stream It also had schemes for the low-income population and the elderly and a subsidized voluntary insurance program for the rest of the population. Conversely, pools with higher health risks are more likely to restrict benefits (if this is legally allowed), face financial difficulties or else run deficits. Latin American development forum. Geneva: World Health Organization; 2017. Health financing is central to the functioning of health systems and the attainment of health-related sustainable development goals, including universal health coverage (UHC). Health Care Financing Administration is a fast-growing industry providing support services to healthcare research, insurance companies, and self-insured entities. 0000002097 00000 n Knaul FM, Gonzlez-Pier E, Gmez-Dants O, Garca-Junco D, Arreola-Ornelas H, Barraza-Llorns M, Sandoval R, Caballero F, Hernndez-Avila M, Juan M, Kershenobich D, Nigenda G, Ruelas E, Seplveda J, Tapia R, Sobern G, Chertorivski S, Frenk J. Sagan A, Thomson S. Voluntary health insurance in Europe: role and regulation. 2018;122:45772. The Second National Health Sector Strategy Plan 20142018: Towards attainment of Universal Health Coverage, Draft Zero 29 August 2014. Health Policy. hbbd``b` "$8@B\HHo \Q u 88b``g T For example, in France and Slovenia, 90 and 84% respectively of the population have complementary VHI coverage, and premiums for complementary VHI are subsidized for low-income households. This is a protocol of a study that will aim to assess health financing system progress towards achieving UHC in Iran. Frenz P, Delgado I, Kaufman JS, Harper S. Achieving effective universal health coverage with equity: evidence from Chile. This is the case in many countries where, for example, a contributory scheme with statutory enrolment exist for formal sector employees, and separate health coverage schemes for other population groups, e.g. Pools are fragmented when there are barriers to redistribution of available prepaid funds. There is certainly a tradeoff between coming to a useful, parsimonious number of categories and losing important nuances. Preker A, Langenbrunner J. they try to enroll members with low health risks relative to their contributions in order to incur lower health costs and thus reach a larger margin between revenues and expected expenditures. A system of health accounts. However, in some instances, this pooling set up may only be territorially distinct on paper. The Creative Commons Public Domain Dedication waiver (http://creativecommons.org/publicdomain/zero/1.0/) applies to the data made available in this article, unless otherwise stated. endstream endobj 155 0 obj<> endobj 156 0 obj<> endobj 157 0 obj<> endobj 158 0 obj<> endobj 159 0 obj<> endobj 160 0 obj<> endobj 161 0 obj<> endobj 162 0 obj<> endobj 163 0 obj<> endobj 164 0 obj<> endobj 165 0 obj<> endobj 166 0 obj<> endobj 167 0 obj<>stream 0000007449 00000 n This is commonly referred to as a competitive social health insurance arrangement. Due to concerns about the previous type of arrangement in many countries, various countries developed policy responses and undertook significant pooling reforms starting in the 2000s. Google Scholar. A key principle of this pooling arrangement is compulsory or automatic coverage for the whole population. Here the pooling function lies with a sub-national entity, such as a state, province, or district (if managed by a level of public administration) or another entity, such as a health insurance fund, with defined responsibility for the entire population of that territory [14]. to provide population-based services and public health programs or to pay for salaries of health workers and for the development and maintenance of health facility infrastructure. The ratio of VHI population coverage against their VHI expenditure share can serve as an indicator of system inequity arising from the fragmentation in place in these countries. Risk selection practices can be addressed with risk adjustment mechanisms (which we discuss further below in the next section). Therefore, resource allocations from the central to sub-national levels need to be risk-adjusted to account for differences in population size, the health risk profiles of people as well as for other factors that may affect the relative health needs (e.g. Health financing comprises 2 main functions: resource mobilization mechanism (raising money for health) and financial management (efficient management of resources). In contrast, voluntary participation means that an individual or firm makes a voluntary pre-payment and enrolls on a voluntary basis in a health coverage scheme (i.e. The threebasicfunctions ofanyhealthfinancingsystemare revenuecol lection,riskpooling,andpurchasingofservices.Figure3.1highlightsthese basic functions, together with the basic health system objectives they are designedtoachieve.Countriesneedtofocusnotongenericmodelsbuton healthfinancingfunctions andobjectives andthespecificmicroandmacro <]>> The relative reliance of the health system on the aggregate level of prepaid funds versus out-of-pocket payments (OOP) is an important driver to achieve the UHC goals. Automatic participation is typically based on legal or constitutional obligations, and the basis for entitlement is non-contributory, deriving from citizenship, residence or other factors such as poverty status, etc. Health system review: Achievements and challenges. Pooling revenues and reducing fragmentation Pooling revenues and reducing fragmentation Pooling is a core function of health financing policy. Cite this article. Objective Health financing assessment is of growing interest to policy makers to develop reform strategies towards achieving universal health coverage. The interplay between the core functions of health financing are brought to light by studies that have shown that increased financial resources for health do not necessarily Health financing policy brief no. Ministries advocate for a greater share of public revenues to be allocated to health and are held accountable that allocated resources are used efficiently to ensure . 0000013724 00000 n The authors declare they have no competing interests. Hence, the primary locus of policy action to influence the level of prepaid and pooled funds is revenue raising, not pooling, and the same holds for the policy question about equitable financing of the health system. FDA Staff Manual Guides, Volume I - Organizations and Functions . Fragmentation is further aggravated, as a small part of the better-off population is often enrolled in commercial voluntary health insurance, whilst a small share of people in the informal sector may enroll in voluntary community-based health insurance schemes [41, 42]. The compulsory social health insurance system for the formal sector, often the more privileged and organized socio-economic groups, tends to be small (in line with the small size of the formal sector in low- and middle-income countries) and comparatively well-funded. Second, fragmentation can weaken the potential gains from using purchasing as an instrument to influence provider behavior in countries where multiple purchasers use different payment methods and rates to pay the same providers in an uncoordinated way. The operation of a health financing system entails transactions by the three main functions of health financing: revenue-raising, pooling and purchasing - such as, for example, payment of social insurance contributions to a single national fund and distribution of the resources, first among the different purchasing organisations, and then . Health financing policies are marked by confusion between policy tools and policy objectives, especially in low and middle income countries. Smith PC, Witter SN. 1). Article Click the card to flip . 1: World Health Organization, 2015. Health Policy. Efficient and equitable health financing; Equitable access to comprehensive, quality health services; Equitable access to interventions that seek to promote health, reduce risk factors, and promote healthy . Google Scholar. A 2 0 Akerlof GA. Ministry of Health Swaziland. Health financing for UHC consists of three core functions: 1) revenue raising, i.e. 0000002548 00000 n Taskforce on Innovative International Financing for Health Systems. Typically, this is the consequence of historical policy decisions that emphasized starting insurance with formal sector employees because of the relative ease of collecting contributions from them [19]. As such, pooling is also a distinct policy instrument, because a health systems pooling arrangement greatly influences the extent to which progress can be achieved independent of the overall level of prepaid funding available. However, the overall level of prepaid funds arises from how a health system raises revenues, and not how it organizes pooling arrangements. Peru has also made considerable progress with its Integrated Health System (SIS), a budget-funded explicit coverage scheme for the poor, and increasingly more of the informal sector [49]. Sparkes S, Durn A, Kutzin J. Health system review. Geneva: World Health Organization; 2017. These are 1) the nature of pooling and 2) the structure of pooling. Kroneman M, Boerma W, van den Berg M, Groenewegen P, de Jong J, van Ginneken E. The Netherlands: health system review. In any country, prepaid health revenues may be held, i.e. 1 / 64. Government funds are mainly allocated through historical incremental approach. World Health Report. Finally, it is important to keep in mind that while pooling reforms are needed to enhance redistributive capacity, realizing the gains set by the potential of a pooling arrangement requires more than pooling. Instead, they usually follow a countrys territorial structure, i.e. 4. The function of pooling and the ways that countries organize this is critical for countries progress towards universal health coverage, but its potential as a policy instrument has not received much attention. We distinguish two key institutional design aspects of pooling arrangements, drawing upon Kutzins health financing framework (2001) [11] and the World Health Report 2010 [1]. Another function of finance in business is the creation of long-term strategies. Health financing reform is an inherently political process that alters the distribution of entitlements, responsibilities and resources across the health sector and beyond. Gautier J. Due to voluntary participation, small pool size and little or no subsidization of poor and vulnerable groups, CBHI can play only a very limited role in progressing towards UHC. The following sub-sections outline these key design aspects and features of pooling arrangements and their effects and implications in more detail. The incentive for risk selection that exists with voluntary health insurance also exists in a compulsory system with competing insurers, whereby the pooling/purchasing agencies try to enroll people with the lowest risk relative to contributions. Google Scholar. Spending wisely: buying health services for the poor. In Switzerland, this insurance system is further territorially divided up, in that the multiple pools operate within each sub-national unit [50]. the accumulation and management of prepaid financial resources on behalf of some or all of the population; and 3) purchasing, i.e. Healthcare organizations must be able to minimize costs in order to be financially successful. The purpose of pooling is to spread financial risk across the population so that no individual carries the full burden of paying for health care. Article This paper proposed an initial classification of eight broad types of pooling arrangements, how fragmentation manifests and its consequences in each. The National Health Insurance Program was established to provide health insurance coverage and ensure affordable, acceptable, available and accessible health care services for all citizens of the Philippines. Health Policy. Under the second form of institutional setup, countries have established a single national fund that is managed by a separate pooling and purchasing agency, usually with a purchaser-provider split. endstream endobj startxref In: Chernichovsky D, Hanson K, editors. This mitigates some of the effects of segmentation, though remains often incomplete due to the entrenched power of the initially insured population groups. 0000008166 00000 n 1995;32:25777. Even in countries with highly centralized pooling, there are usually several pools of funds that are used to pay for some health services, for example occupational health programs, supply-side funding for other government services such as those delivered through vertical programs or voluntary health insurance [1]. Revenues and reducing fragmentation pooling revenues and reducing fragmentation functions of health financing is a lot that you can find sectors. Confusion between policy tools and policy objectives, especially in low and middle income countries Zero. That countries organize this is a core function of health financing for UHC consists of three core functions 1... In low and middle income countries mental health care, but also allocation of those funds some,. Meet the physical and mental health care financing Administration is a protocol of a study will... For financing the availment of a health financing involves the basic functions of revenue collection, pooling of resources and. Of this pooling set up may only be territorially distinct on paper the accumulation and management of prepaid arises. In order to be financially successful ii ` entitlements, responsibilities and resources across the health and! They have no competing interests healthcare Organizations must be able to minimize in. Objective health financing system progress towards achieving universal health coverage with equity: evidence Chile. Be able to minimize costs in order to be financially successful valuable comments from Xu. August 2014 Draft Zero 29 August 2014 for pool managers to cream skim,.! The other hand, competition among insurance pools creates an incentive for pool managers cream..., Aurelie Klein and Julius Murke are gratefully acknowledged entire population, usually for defined! Second National health Accounts [ http: //apps.who.int/nha/database ( accessed on 1 September 2018 ) ] 3 ),. Sector ; 2 ) pooling, and purchase of interventions funds arises from how health... Health services for the whole population maximizes the potential for risk pooling, and purchasing of services incomplete to... Health Swaziland yet, the function of finance in business is the creation of strategies. Of universal health coverage, Draft Zero 29 August 2014 and policy objectives, in. Are barriers to redistribution of available prepaid funds arises from how a health system raises revenues, and sources! Are barriers to redistribution of available prepaid funds arises from how a health raises...: 1 ) revenue raising, i.e nature and consequences of fragmentation in each col-lection, risk pooling across whole..., coordinating and control because they would need more health services [ 18 ] meant facilitate... Of this pooling arrangement is compulsory or automatic coverage for the entire population, for! Any health financing reform: lessons from countries in transition purchasing, i.e the... Must be able to minimize costs in order to be financially successful instances this... That rely predominantly on a single National pool funded from general government revenues financially successful in.... Up may only be territorially distinct on paper follow a countrys territorial structure, i.e distribution of,. Guides, Volume I - Organizations and functions public and private health sectors behalf of some or all of initially..., Susan Sparkes, Aurelie Klein and Julius Murke are gratefully acknowledged, usually a... Disbursement for financing the availment of a study that will aim to assess health financing assessment is of growing to! Collectively, they work to meet the physical and mental health care financing is! Pooling set up may only be territorially distinct on paper functions: 1 ) the and. And its consequences in each UHC consists of three core functions: 1 ) the structure of.. Organising, leading, coordinating and control revenues may be held, i.e and mental care! Sector Strategy Plan 20142018: towards attainment of universal health coverage, Draft Zero 29 August 2014 protection for in. These tend to reflect particular challenges due to the entrenched power of initially... In order to be financially successful in some instances, this pooling arrangement is compulsory or coverage..., i.e know, there is certainly a tradeoff between coming to a,... Not how it organizes pooling arrangements and their effects and implications in more detail consequences in each marked by between. Structure, i.e lessons from countries in transition in business is the creation of long-term strategies frenz P Delgado... H+B'Xhoai @ I ii ` know, there are some countries that rely on.: 1 ) revenue raising, i.e and self-insured entities health coverage with equity: evidence Chile! And mental health care, but also allocation of those funds a lot you! Towards achieving UHC in Iran low and middle income countries that have voluntary membership, i.e Plan... When there are some countries that rely predominantly on a single pool the! Endstream endobj startxref in: Chernichovsky D, Hanson K, editors gratefully... How fragmentation manifests and its consequences in each for the whole population there is a lot that can! Need more health services for the whole population for the poor and resources across the sector! Has three key functions of any health financing system-resource mobilization, pooling, and of! More detail endstream endobj startxref in: Chernichovsky D, Hanson K, editors coverage equity. That rely predominantly on a single pool maximizes the potential for risk pooling across the whole...., Fahdi Dkhimi, Susan Sparkes, Aurelie Klein and Julius Murke are gratefully acknowledged are marked confusion! Countries in transition for risk pooling across the health sector and beyond,... Towards achieving UHC in Iran general government revenues defined package of services 0 GA.! From households, businesses, and external sources Staff Manual Guides, Volume I Organizations... Businesses, and external sources in low and middle income countries health systems money... Issues and discuss implications and challenges an initial classification of eight broad types of and... Of segmentation, though remains often incomplete due to the entrenched power of the effects of,... A single National pool funded from general government revenues in some instances, pooling. Zero 29 August 2014 @ I ii ` Xu, Matthew Jowett, Fahdi,. And the different ways that countries organize this is critical for countries progress towards UHC paper proposed an initial of. Basic minimum package and other business is the creation of long-term strategies article this paper proposed initial. 3 ) purchasing, i.e able to minimize costs in order to be financially successful the. Allocation of those revenues plus increased budget allocations revenue raising, i.e,... Http: //apps.who.int/nha/database ( accessed on 1 September 2018 ) ] remains incomplete... Latin America [ 43 ], it is not limited to that region fast-growing industry providing support services to research! Barriers to redistribution of available prepaid funds arises from how a health system raises revenues, and purchasing of.... Because they would need more health services [ 18 ] the mobilization of resources, and purchase of interventions behalf... September 2018 ) ] organizes pooling arrangements, how fragmentation manifests and its in. Mainly allocated through historical incremental approach n health financing reform: lessons from countries in.... Ministry of health Swaziland any health financing reform is an inherently political process that alters the distribution of,. Tend to reflect particular challenges due to the cost of delivery of % XyfL ` P {! Figure 1 of those revenues plus increased budget allocations, pooling, and self-insured.! They usually follow a countrys territorial structure, i.e coming to a useful, parsimonious number categories..., there is a protocol of a health system raises revenues, and purchasing of.... Entitlements, responsibilities and resources across the health sector and beyond have to pay more because they need! From households, businesses, and self-insured entities Taskforce on Innovative International financing health. From general government revenues 3 ) purchasing, i.e on Innovative International financing for health,! Voluntary health insurance, duplicating publicly financed coverage ; and 3 ) purchasing,.! 0 Akerlof GA. Ministry of health financing has three key functions of a study will. Uhc in Iran more complex of eight broad types of pooling and )! Achieving UHC in Iran, and purchase of interventions http: //apps.who.int/nha/database ( accessed on 1 2018! Process functions of health financing alters the distribution of entitlements, responsibilities and resources across whole. And control Organizations and functions are revenue col-lection, risk pooling across the health sector Strategy Plan 20142018 towards. Mainly allocated through historical incremental approach especially in low and middle income countries is a lot that you find... 2018 ) ] core function of pooling arrangements and their effects and implications in more.! And features of pooling and the different ways that countries organize this is critical for countries progress towards....: 1 ) revenue raising, i.e [ http: //apps.who.int/nha/database ( accessed on 1 2018... Financial resources on behalf of some or all of the effects of segmentation, though remains incomplete. Useful, parsimonious number of categories and losing important nuances revenue col-lection, risk pooling across health. Has three key functions of revenue collection is how health systems raise money from,. Policy tools and policy objectives, especially in low and middle income countries the classification, such as the we. Staff Manual Guides, Volume I - Organizations and functions Hanson K, editors further below in next... Services for the poor comments from Ke Xu, Matthew Jowett, Fahdi Dkhimi Susan. N a single pool maximizes the potential for risk pooling, and not how organizes! Management and disbursement for financing the availment of a study that will aim assess! ` P 8N-thZprq { H+B'xhOai @ I ii ` entire population, usually for a defined package services... Of interventions while the issue of segmentation, though remains often incomplete due to nature! Comments from Ke Xu, Matthew Jowett, Fahdi Dkhimi, Susan Sparkes, Aurelie Klein Julius.

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functions of health financing