Topic 6_Health Systems and Financing.ppt

Health Systems and Financing

2. Overview
Health System
Importance and rationale for the focus on
health financing
Definitions for health care financing
Different mechanisms of financing
Health Financing in Kenya
Community based financing

3. Health System
Sometimes referred to as healthcare system is
the organization of people, institutions and
resources that deliver healthcare services to
meet the health needs of a target population

4. Health System (functions and Goals)
Stewardshi
p
(oversight)
Financing
(collecting, pooling
and purchasing)
Health
Fairness in
financial
contribution
Responsiveness
(the way people are
treated and the
environment)
Resource
development
Service
delivery
(provision)
I
N
P
U
T
S
Coverage
Efficiency
Quality &
Safety

5. Universal coverage - three dimensions

6. A good health financing system
Raises adequate funds for health….
In ways that ensure people can use needed
services…
And are protected from financial catastrophe
or impoverishment associated with having to
pay for them

7. Health Financing Functions

8. Revenue collection: Key considerations
and best practice
Sources of funds
Level of funding-a HFS should mobilize adequate resources
External vs Domestic Funding-a HFS should increase domestic
resource mobilization and reduce reliance on external funding
Contribution mechanism
Prepayment vs Direct payment (OOP)- prepayment
mechanisms preferred since they confer financial risk
protection. OOP leads to a catastrophe and impoverishment
Mandatory vs Voluntary- mandatory mechanisms preferred.
Voluntary mechanisms affected by adverse selection, low
enrollment and retention
Equity (progressivity vs. regressivity)-contribution methods
should be progressive to ensure equity

9. Pooling of funds (Risk Pooling): Key
considerations and best practice
Coverage and composition of risk pools
Pooled vs non-pooled funds-pooling of funds
ensures cross- subsidization of risk (health,
financial risk)
Consolidated vs Fragmented pools-larger
consolidated pools preferred to small,
fragmented pools
Who is in the risk pool?- diverse pools (rich/ppor/
young/ old/ sick/ healthy) preferred over
homogenous pools (same risk profile)

10. Healthcare Purchasing: Key considerations
and best practice
Three questions:
1. What are you purchasing?
Identifying the interventions or services to be purchased,
taking into consideration population needs, national
health priorities and cost- effectiveness
2. From whom are you purchasing?
Choosing service providers, giving consideration to service
quality, efficiency and equity
3. How are you purchasing? Determining how services
will be purchased, including contractual arrangements
and provider payment mechanisms

11. Goals and Objectives of Health Financing Strategy
Goal: Ensure adequacy, efficiency and fairness in
financing of health services in a manner that guarantees
all citizens access to essential health services they
require
Specific objectives
1.To mobilize resources required to provide the essential
health services people need
2.To maximize efficiency and value for money in the
management and utilization of available health
resources and
3.To ensure equity in mobilization and allocation of
health funds to guarantee fairness in use

12. Definition of health care
financing
Definition of health care financing:
i.Mobilization of funds for health care
ii.Allocation of funds to the regions and
population groups and for specific types of
health care
iii.Mechanisms for paying health care

13. Health Service financing Source
Health services are financed broadly through: private,
public or external aid (development partners).
Public expenditure includes all expenditure on health
services by:
central , county and local government funds spent by state
owned and parastatal enterprises as well as government and
social insurance contributions
where services are paid for by taxes, or compulsory health
insurance contributions either by employers or insured
persons or both this counts as public expenditure.
Private expenditures involve voluntary payments by
individuals (including OOPs) or employers.
External sources refer to the external aid which comes
through bilateral aid programme or international non
governmental organizations

14. Mechanisms of Health Financing
i.General revenue or earmarked taxes (Beer,
Cigarette, Air ticket etc)
ii.Social insurance contributions
iii.Private insurance premiums
iv.Community financing
v.Direct out of pocket payments
Each method above:
i.Distributes the financial burdens and benefits
differently
ii.Each method affects who will have access to
health care
iii.Financial protection

15. Total Health Expenditure (THE) and as a share of
GDP

16. 1.General revenue or earmarked taxes
The most traditional way of financing health care
Finances a major portion of the health care (especially
in low income countries)
2. Social insurance
It is compulsory. Everyone in the eligible group must
enroll and pay a specific premium contribution in
exchange for a set of benefits.
Social insurance premiums and benefits are described
in social compacts established through legislation.
Premiums or benefits can be altered only through a
formal political process

17. 3. Private insurance
 Private contract offered by an insurer to exchange a
set of benefits for a payment of a specified premium.
Marketed either by non-profit or for profit insurance
companies
Consumers voluntarily choose to purchase an
insurance package that best matches their preference.
Offered on individual and group basis. Under
individual insurance the premium is based on that
individuals risk characteristics.
Major concern in private insurance is buyer’s adverse
selection
Under group insurance, the premium is calculated on
a group basis. Risk is pooled across age, gender and
health status.

18. 4. Community based financing
Refers to schemes are based on three principles:
community cooperation, local self reliance and pre
payment
Factors for success of community financing:
Technical strength and institutional capacity of the
local group
Financial control as part of the broader strategy in
local management and control of health care services
Support received from outside organizations and
individuals
Links with other local organizations
Diversity of funding
Responding to other (non health) development needs of
the community
Ability to adapt to a changing environment

19. 5. Direct out of pocket
Made by patients to private providers at the time a
service is rendered
User fees refer to fees the patients have to pay to
public hospitals, clinics, and health posts not to
private sector providers.
Proponents of user fees believe that the fee can
increase revenue to improve the quality of public
health services and expand coverage
Major objection raised against user fees had been on
equity grounds (equity in access)

20. Sources of Financing Health Care in Kenya

21. Health expenditures by health financing schemes

22. Changing government role in health
care
i.Health is considered a public good
ii.What are implications of
Constitution of Kenya 2010
iii.Government needs to actively
participate to avoid market failures

23. Conclusion
Health financing cannot be dealt with
separately as it has got to do with good
governance, economic growth, and
education