A pure (unregulated) private health insurance market is inequitable as it is based on risk selection. Cambridge, MA: Harvard University Press. Introduction Health financing reforms in low- and middle- income countries (LMICs) over the past decades have focused on achieving equity in financing of health care delivery through universal health coverage. There may be a single fund or several funds covering different sectors of the population and these are usually publicly run. World Health Organization. Health care financing in upper-middle- and high-income countries is generally provided through health insurance schemes (often employment or union based) or governmental financing that is funded by general taxation. This, plus the high costs associated with any transition, means that developed countries rarely make major changes to their established primary way of paying for health care. responsibilities; modalities for the delivery of health care services; financing mechanisms; and main types of expenditure. This is because in these systems, the process by which the spending level is determined is a political one that forces governments to weigh trade-offs between health and other areas of public spend. Appleby J (2016). formation on the financing of health care in accordance with the system of health accounts. Bethesda, MD: Health Finance and Governance Project, Abt Associates. For example, complaints of underfunding are common in tax-funded systems (Savedoff 2004). Health care costs were about $3.6 trillion dollars in 2018 . At this point many people gave up their insurance, but analysis by the Institute for Fiscal Studies found that the cost of the increase in demand on the NHS was ‘substantially lower’ than the cost to government of the subsidy (Emmerson et al 2001). 2009, Friedberg M, Hussey P, Schneider E.  Primary Care: A critical review of the evidence on quality and costs of health care. As those on low incomes tend to have a higher need for health care, they are also more likely to have higher premiums, which may act as a further barrier to access (Van Doorslaer. Free for all? It is generally considered to be equitable: where general taxation is drawn from the whole population, regardless of health status, income or occupation, it pools both financial and health risks, ie, the sick do not pay more than the well. PHC spending includes the budget that a national or subnational government uses to maintain and strengthen PHC. 2 Main mechanisms of health care financing 3 Government funding 3 Health insurance 3 Mandatory health insurance 3 Voluntary health insurance 3 Out-of-pocket payments 4 3 Assessing financing mechanisms 5 Feasibility 5 Equity 5 Efficiency 6 Sustainability 6 4 Key functions of health care financing 7 Revenue collection 8 Sources of funds 9 National Health Expenditure Trends, 1975 to 2016 [online]. 1 It is a foundational component that impacts the entire health system’s performance, including the delivery and accessibility of primary health care. We do not pay for the NHS with taxes. Wright J and Holtz J. The relative contribution from each of these sources of finance – general taxation, National Insurance and user charges – has fluctuated over the years (see Commission on the Future of Health and Social Care in England 2014b). ‘NHS England using technology to beat cost of missed appointments’. London: HM Treasury. 48.1% of the population live in rural areas and 51.9% in urban areas [16]. In most European and OECD countries, these charges make up only a small proportion of expenditure. H42,H51,I18 ABSTRACT This paper examines the efficiency and equity implications of alternative health care system financing strategies. Available at: www.kingsfund.org.uk/reports/thenhsif/what-if-people-were-to-pay-10-to-see-a-gp/ (accessed on 28 February 2017). This has raised questions about the sustainability of its funding model. ‘Demand for private medical cover increases as corporates extend schemes’. ‘What if people had to pay £10 to see a GP?’ Article. Glob Health Res Policy. This explainer considers NHS England and NHS Improvement’s proposals to further integrate health and care services and describes. The pros and cons of this model vary depending on the taxes used to raise funding, but some general implications are as follows. Washington, DC: World Bank. If there are many insurers and people can switch between them, administrative costs can be high (Wanless 2001). Since the recession, the UK debt and deficit has been at an all time high, where by the end of 2009 UK debt was reported to be £950.4 billion, equivalent 68.1 gross domestic product (GDP) and the deficit was £159.2 billion, which equated to 11.4% GDP (Figure 1).1 With that in mind it is a fact that all public sectors will be facing spending cuts to reduce the government’s debt and deficit. Berlin: Federal Ministry of Labour and Social Affairs. (2002). In the United States, health care is technologically advanced but expensive. financial strategy will be heavily mediated by the quality of local relationships. Our work touches lives around the world every day – often in invisible ways. For example, in Canada, about 70 per cent of health spending is publicly funded though taxation, with the remaining 30 per cent largely accounted for by out-of-pocket spending (costs borne directly by patients) (14.6 per cent) and private health insurance (12.2 per cent) (Canadian Institute for Health Information 2016).1 Financial resources available for health are always finite, and a government’s decisions about resource allocation impact how primary health care is prioritized compared to other components of the health system. Marchildon G (2013). Health Care Finance and Expenditure (3)Overwhelmingly, health care financing in Saudi Arabia is provided mainly fromgovernment revenues. There are strong incentives in tax-funded models to control spending. Learn more in the Improvement Strategies user guide. Health financing revisited: a practitioner’s guide. ‘State health facts: uninsured rates for the nonelderly by age’. Tax-based financing for health systems: options and experiences [online]. Benefit and financing incidence analyses are two analytical methods for comprehensively evaluating how well health systems perform on these objectives. At the same time, exclusion and lack of access to quality services persist for large sectors of the population. Central govt pays for it with the UK's sovereign fiat currency and uses taxation along with other tools to control the inflation which would otherwise result. This means it does not discriminate against those who are older or have pre-existing medical conditions. European Observatory on Health Systems and Policies website. Arguments that the privately insured are ‘paying twice’ and are making less use of public services can lead to advocacy for tax relief for PHI (see box). Tax-funded models typically seek to pool risk across large populations and make health services available on a universal basis. Proponents of hypothecated taxes often argue that: However, those against this form of tax argue that: Finance ministries across the world, including HM Treasury, may resist hypothecated taxes, mainly because they reduce flexibility in deciding on spending priorities that will change over time. NHS Digital website. In line with WHA 58.33, WHO/AFRO in 2006 through its regional committee adopted a report “Health Financing: A Strategy for the African Region” under AFR/RC56/10 reinforcing the resolution and how to practically implement in the African region. Many countries already impose such charges, including New Zealand and Sweden. Private healthcare is where the capital is raised through the patients using the health services. Geneva, Switzerland: WHO. The NHS is funded mainly through general taxation supplemented by National Insurance contributions. It might also encourage previously passive patients to become more active consumers of GP services, stimulating innovation and choice in the primary care market. 1.1 Efficiency Given the limited resources available for health in developing countries, it is essential to raise and use resources as efficiently as possible. Wanless D (2001). Also if people used the variations for medical aids, it would relieve the burden on the prescription budget. There are a variety of failures in health care insurance markets (such as asymmetric information and market power), so when private health insurance is used as a primary source of funding it tends to be heavily regulated. In India, for example, more than 70 per cent of total health expenditure is accounted for by user fees (Mossialos et al 2016). In most countries, the statutory scheme does not raise sufficient funds and is subsidised by other means (see below). Available at: www.bmas.de/EN/Services/Publications/a998-social-security-at-a-glance.html (accessed on 7 March 2017). This deterrent effect can mean that people delay seeing a GP about a genuine health need; this can lead to a deterioration in the patient’s health and a requirement for hospital admission, which is more expensive. Free for all? The King’s Fund website. This concept of direct exchange between the buyer and the seller is not repudiated by the existence of credit. Health care financing schemes as the main “building blocks” of the functional structure of a country’s health financing system: the main types of financing arrangements through which health services are paid for and obtained by people. The way that social health insurance schemes operate varies widely from one country to another. Contributions are often collected by independent bodies, usually known as insurers or ‘sickness funds’, which are responsible for paying providers of health and care services. MECHANISMS FOR EVALUATING FINANCIAL HEALTH OF HEALTH CARE ORGANIZATIONS Case Assignment Pearland Medical Center reported revenues of $1,500,000,000 in 2012 and $1,250,000,000 in 2013. Nigeria is a Lower Middle-Income Country (LMIC) in West Africa [15] with a population that has risen from 123.7 million in 2000 to158.4 million in 2010. Innovative financing refers to a range of non-traditional mechanisms to raise additional funds for development aid through "innovative" projects such as micro-contributions, taxes, public-private partnerships and market-based financial transactions.. As of the beginning of 2010, most of the existing innovative financing mechanisms were allocated for the health care sector in developing countries. Available at: www.laingbuisson.com/laingbuisson-release/demand-private-medical-cover-increases-corporates-extend-schemes/ (accessed on 1 March 2017). Health Affairs. In the United States, PHI is the dominant form of health cover for most of the population. Competition can in theory also drive down premium prices between competing insurance companies; however, Switzerland and the US, which both use PHI as the primary source of financing, spend more on health than the UK. Cooperative HealthInsurance System will be applied, so private health sector participation will be increased.Trends in financing … Available at: www.euro.who.int/en/about-us/partners/observatory/publications/health-system-reviews-hits/full-list-of-country-hits/canada-hit-2013 (accessed on 7 March 2017). As spending on health care tends to rise over time, health services can consume an increasing proportion of public spending. For a discussion of the arguments for and against funding the NHS through hypothecated taxation see Layard and Appleby 2017. However, there is no evidence that one funding model or particular mix of funding mechanisms is inherently superior to others. Layard R, Appleby J (2017). A new financial architecture for the NHS requires coherence and balance, and a recognition that that any national. Available at: www.kingsfund.org.uk/publications/new-settlement-health-and-social-care-interim (accessed on 3 March 2017). European Observatory on Health Care Systems Series. We do not consider how social care is funded; in England, health and social care are funded separately, while the definition of social care varies between countries, making comparisons difficult. Financing and Payment Models for Primary Health Care: six lessons from JLN country implementation experience. Hypothecated taxes– sometimes also called ‘earmarked taxes’ – are taxes that are assigned to a specific purpose. Health financing refers to how financial resources are used to ensure that the health system can adequately cover the collective health needs of every person. Most plans require members to cover some of their care costs through co-payments and other charges. A new settlement for health and social care: final report. Members may or may not have a choice of which fund they join. Those earning above €57,600 per year can opt out of the social health insurance system and purchase private insurance instead (Federal Ministry of Labour and Social Affairs 2016). I live in Washington State. For the sake of simplicity, we have limited this analysis to health care; however, it is important to note that most countries face similar challenges in funding social care. Available at: www.england.nhs.uk/2014/03/missed-appts/ (accessed on 8 March 2017). However, as with tax-funded models and social health insurance, countries that use PHI as a dominant form also rely on other sources of funding (for example, see box on US). The exemptions in place resulted in 90 per cent of all prescription items in England being dispensed free of charge last year (Health and Social Care Information Centre 2016). The budgetary provision for the MOH has continued to increase—from 2.8% of the national budget in 1970 to 6.4% in 2004. www.kingsfund.org.uk/reports/thenhsif/what-if-people-were-to-pay-10-to-see-a-gp/, www.cihi.ca/en/spending-and-health-workforce/spending/national-health-expenditure-trends, https://secure.cihi.ca/estore/productFamily.htm?pf=PFC1661&lang=fr&media=0, www.kingsfund.org.uk/publications/new-settlement-health-and-social-care, www.kingsfund.org.uk/publications/new-settlement-health-and-social-care-interim, www.bmas.de/EN/Services/Publications/a998-social-security-at-a-glance.html, www.ohe.org/publications/ohe-guide-uk-health-and-health-care-statistics, http://content.digital.nhs.uk/catalogue/PUB20664, www.kff.org/state-category/health-coverage-uninsured/, www.laingbuisson.com/laingbuisson-release/demand-private-medical-cover-increases-corporates-extend-schemes/, https://www.parliament.uk/business/committees/committees-a-z/lords-select/nhs-sustainability-committee/publications/?type=Written, www.euro.who.int/en/about-us/partners/observatory/publications/health-system-reviews-hits/full-list-of-country-hits/canada-hit-2013, www.commonwealthfund.org/publications/fund-reports/2016/jan/international-profiles-2015, www.euro.who.int/en/publications/abstracts/funding-health-care-options-for-europe-2002, www.oecd.org/eco/monetary/policy-notes.htm, www.oecd.org/els/health-systems/health-working-papers.htm, http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN01480, http://webarchive.nationalarchives.gov.uk/20130107105354/http://www.hm-treasury.gov.uk/consult_wanless_final_2001.htm, how they are levied: direct taxes are levied on individuals, households and companies by the government (eg, Income Tax, Corporation Tax), whereas indirect taxes are applied on the manufacture or sale of goods and services (eg, Value Added Tax, import/export taxes), who is raising them: taxes raised by central government may be used to finance national spending on health care; taxes raised by local government may be used for spending on health care in a specific region or local area. In most markets, buyers and sellers trade directly. User charges also apply where individuals seek private care for services or treatments not covered by a national scheme or insurer, or where access may be limited (eg, paying privately for an operation to avoid having to wait). The final report from the Commission on the Future of Health and Social Care in England. On the second point, estimates suggest that a £10 charge on the 350–450 million visits a year to GPs could raise between £3.5 and £4.5 billion a year (Appleby 2016). Health care financingDefinition (1)Health care finance is a branch of finance that helps patients and health care beneficiaries payfor medical expenses in the short and long terms. Estimation of unit costs for general health services: updated WHO-CHOICE estimates. Canadian Institute for Health Information (2016). But more importantly this is about funding the NHS and beyond. Spending on primary health care refers to the amount of funding available for PHC and is a measure of the relative prioritization of PHC compared to other kinds of care. Key Indicators Compared to private insurance, SHI is generally considered to be more efficient as it allows pooling of resources and risk across a group of people. We also cover user charges. Policy-holders contribute on a regular basis. The architecture of health care financing affects how a health system performs and a country’s ability to achieve the goals of universal health coverage for all mothers and babies [1–3].There are many mechanisms (e.g., tax revenues, non-tax revenues, external grants or loans, out of pocket payments and voluntary health insurance) for financing of maternal health services []. There have been some reviews related to health financing and health promotion in Thailand (Adulyanon, 2012; Evans et al., 2012); however, they only focus on one fund or on curative care. Health systems institutional characteristics: a survey of 29 OECD countries. ‘Canada: health system review’. Selected domains that might be most directly affected include: No health financing strategy works in all cases and all systems; they must respond to the specific context and structure of a country’s health system. This household budget mentality leads people to think we "can't afford" things which we have the real resources to create. Available at: http://www.bmj.com/content/347/bmj.f4797. In practice, many European countries use exemptions to ensure that individuals less able to pay are not discouraged (or prevented) from seeking care when they need it. In the United States, health care is technologically advanced but expensive. Health care costs were about $3.6 trillion dollars in 2018 . However, significant gaps in coverage remain. Background Nigeria and Ghana have recently introduced a National Health Insurance Scheme (NHIS) with the aim of moving towards universal health care using more equitable financing mechanisms. Revenues should come from pre… Proponents argue that such a charge would deter overuse of GP services by those who do not have a genuine health need and would raise additional money for the NHS. It is also often argued that private health insurance reduces the burden on public finances by taking some people out of the state system. The amount of money spent per person on health care is higher in the United States than in other countries. As COVID-19 strains our health systems, primary health care is a key part of pandemic preparedness and response and is the foundation of recovery. Other funding streams used to supplement it in Singapore include direct subsidies to hospitals, voluntary back-up insurance to cover high health care costs and a government-funded safety net for low-income people (McKee 2013). Kaiser Family Foundation (2013). A t… Therefore, to understand how the maternal health system is financed, this review aims to examine the mechanisms for funding, pooling and purchasing maternal health care and the influence these financing mechanisms have on the delivery of maternal health … The NHS is funded mainly through public financing. Washington, DC: Joint Learning Network for Universal Health Coverage. On the first of these points, figures suggest that more than 12 million GP appointments are missed each year in the UK, costing more than £162 million per year (NHS England 2014). Social security at a glance 2016. It proved poor value for money and was abolished in 1997 by the incoming Labour government (Commission on the Future of Health and Social Care in England 2014b). In Sweden, for example, public funding for health care comes from both central and local taxation. Most health sector reform measures attempt to address health financing issues such as mobilization of funds, distribution of financial risks, allocation and utilization of services, and provider payment incentives. Typically, employees and employers pay contributions to cover a defined package of services (Wagstaff 2010). Second edition. Regardless of how health care is funded, all countries face similar challenges – namely, how to meet rising demand for services and transform care in response to an ageing population and changing patterns of disease. Equity in the finance and delivery of health care: an international perspective. In Australia, government reforms were introduced in the 1990s to encourage take-up of private health insurance – including a 30 per cent rebate for premiums and income tax surcharges for those on higher incomes without private cover. provider payment mechanisms. Medical savings accounts: Singapore’s non-solution to healthcare costs. Capital financing has varying effects on hospitals and health systems, and much of that has to do with the size of the organization. To pay for this, governments can either divert funds away from other areas of public spending or raise taxes, which can be unpopular, and particularly difficult during an economic downturn. The NHS is mainly funded from general taxation and National Insurance contributions. Available at: www.kingsfund.org.uk/publications/new-settlement-health-and-social-care-interim (accessed on 28 February 2017). Using data across the OECD, I find that almost all financing choices are compatible with There are trade-offs inherent within all health financing strategies. SHI schemes usually result in higher taxes on wages; employers and employees both contribute, leading some organisations to argue that this makes them less competitive in a global market when compared to those in countries that fund health care through general taxation. The benefits package may vary between insurers, enabling people to choose according to their means, needs and preferences. Financial coverage improvement strategies aim to reduce the system’s reliance on out-of-pocket spending as a means for financing primary health care, because out-of-pocket payments limit access to primary health care services, especially among the poor. Essential Packages of Health Services in 24 Countries: Findings from a Cross-Country Analysis. ‘Soft’ hypothecation can also refer to cases where an increase in tax is nominally linked to a specific area of spending – for example, the Labour government’s decision in 2002 to add 1 per cent to National Insurance to pay for increases in NHS spending. In 2013, local taxes accounted for 68 per cent of county councils’ total revenues, 18 per cent came from subsidies and national government grants financed by national income taxes and indirect taxes (Mossialos et al 2016). Financing & Provision of health care; Who pays? Richard Murray and Siva Anandaciva discuss how lessons from the recent history of NHS finances can help the system plan for the future. Health care costs were about $3.6 trillion dollars in 2018 (1). Available at: www.oecd.org/els/health-systems/health-working-papers.htm (accessed on 9 March 2017). The cost of the systems needed to administer and collect user charges reduces the net contribution charges can make. They can guide policymakers and health systems leaders to prioritize funding for PHC, align financial incentives to enable better quality PHC, and improve financial access to PHC.2. Seely A (2011). Washington, DC: Results for Development; 2017, Langenbrunner J, Cashin C, O’Dougherty S, editors. Paris: OECD publishing. This means that insurers can deny cover (or charge very high premiums) to those who are deemed more likely to use health care services, such as those with pre-existing medical conditions or older people, leaving a proportion of the population uninsured (and therefore forced to pay for their own care). Newhouse JP (1993). Often these exemptions apply to people on lower incomes, children or older people, or people with long-term conditions or a disability. 2018; 3:17, Newhouse J and the Insurance Experiment Group. Setting up exemption arrangements can add to the complexity of administration and further reduce the financial benefit. User charging can discourage people from seeking care. BMJ, vol 347, j4797. In their purest form, user charges rely on patients paying the cost of care. Although no European or OECD (Organisation for Economic Co-operation and Development) country relies on user charges as a primary source of health care funding, all countries incorporate at least some element of user charging into the funding mix. financing mechanisms, key categories of health care providers and user groups (Work Package 1). We outline how each model works in its purest form, while recognising that most countries typically pay for health care using a combination of methods. These arrangements would significantly reduce the amount a charge would generate. In many countries, the health system’s financing strategy creates an imbalance that favors more expensive hospital care over PHC.2 This Improvement Strategies module focuses on financing mechanisms that can be leveraged to increase equitable access to quality primary health care, while also promoting efficiency. Receipts, budget deficits would be either impossible or denominated in foreign currency the organization exclusion and of! Medical cover increases as corporates extend schemes ’ and poverty been calls for 'alternative financing ' in order address! 2004 ) ( Savedoff 2004 ) arguments for and against funding the NHS and beyond the defined package health! Policy Notes, no country relies on general taxation supplemented by national insurance contributions F ( )! Use pot, but there is no evidence that one funding model the strategies and that... Severe slowdown in funding in its history ( 22 % of the for. 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