Introduction to Health Financing

PST 06105: HEALTH FINANCING

Session 1: Introduction to Health Financing

Learning Tasks

At the

end of this session students are expected to be able to

:

Explain the historical background of health financing

Describe various concepts of health financing

Historical

Background of Health Financing

H

ealth

financing has been one of the most important policy

agenda nationally

and internationally among health leaders and policy-makers.

Health

financing has risen on agenda of policy- makers due to the fact that

health systems

, especially developing countries, are facing what is known as a problem

of financial

(fiscal) sustainability.

Historical

Background of Health Financing

Problem of financial

sustainability:

exists

when health system or government is

unable

to

meet its obligations due to its

inability

or

unwillingness

to generate sufficient

revenue to

meet them

.

Historical

Background of Health Financing

Key symptoms of the problem of financial

sustainability:

(

World Bank, 1987, 1993):

Misallocation

and insufficient spending

on cost-effective health interventions

needed by

the population: public money

was/is

spent on health interventions of low

cost effectiveness

Internal

inefficiency:

much of the money spent on health is wasted:

brand-name pharmaceuticals

are purchased instead of generic drugs, health workers are

badly deployed

and

supervised, and hospital beds are underutilized.

Historical

Background of Health Financing

Key symptoms of the problem of financial sustainability:

( World Bank, 1987, 1993):

Inequity

in the distribution of benefits from health services:

The better-off in most had and continue to have better access to health care ; the poor lack access to basic health services and receive low-quality care

Difficulty in achieving or maintaining acceptable quality services within the government budget

Historical

Background of Health Financing

As result of these problems, world bank and others proposed

health sector

reforms

policies

that were intended to improve performance of health systems;

These

reforms, among, other recommended that health financing should be

strengthening by

introducing the following:

new

financing mechanisms such as user fees,

health

insurance

and other sick coverage; and

improved

management of public health services.

Activity: Brainstorming

What is the meaning of the term “health financing” and “sources of finances”?

8

Health

financing

is

defined variously by different experts:

R

efers

to

collection

of funds from various

sources (e.g

. government, individual, businesses, donors); pooling fund to share financial

risks across

larger population groups; and using them to pay for services from public

and private

health-care providers. (WHO, 2000)

Is the

process by

which revenues

are collected from primary and secondary sources, accumulated in fund

pools and

allocated to provider activities.

(

Mossialos

et

al,2003

),

It

is defined also as a process of raising financial resources to finance and pay

for health

services

Sources

of finances

T

he

main sources of finances for health care are:

Individuals

, households and employees

Firms

, corporate entities and employers

Foreign

and domestic NGO‟s and charities

Foreign

governments, companies multilateral agencies

Contribution

Mechanisms

The contribution mechanisms are the ways in which individuals, households, firms

and governments

do contribute funds to collecting agents.

The

main contributing

mechanisms are

:

Direct

and indirect taxes

Compulsory

insurance premiums

Voluntary

insurance premiums

Out-of-pocket

payment(user charges)

Donations

, grants and loans

Medical

savings accounts

Importance

or significance of health financing

The importance or significance of health financing has been stated by WHO (2003)

as follows

:

Adequate

and sustained financing is a critical factor in the

creation of a viable health

system

.

Fair

financing mechanisms allow people to

access health services

at the right time

and prevent

people against impoverishment

Financing is the mechanism by which plans and policies

are translated into

action

through

the allocation of

resources

Importance or significance of health financing

Without adequate financing, plans remain in the realm of rhetoric and good intentions

With

adequate financing, a resource base can be created for the operations and delivery of services, the development and deployment of a trained workforce and the required infrastructure and technology

Financing is a fundamental building block on which the other critical aspects (services, human resources, medicines and equipment, health information and leadership and management) of the health system rest

Also, financing is a powerful tool with which policy-makers can develop and shape health services and their impact in improving health of the population

Key points

Health financing is an important topic and sub-component of health system that

facilitate delivery

of health service and improvement of health of the population

There

are number of concepts that need to be understood for better understanding

of health

financing

Evaluation

What is the meaning of the following

terms

h

ealth

financing,

health

financing

functions,

sources

of finance,

contributing

mechanism, and

financing

option/ mechanism

What

are the symptoms the problem of financial

sustainability?

Reference

Gottret

, P.

Schieber

, G. (2006). Health financing revisited: a

practioner’s

guide.

Washington DC

, USA. World Bank

Green

, A. (2007). An introduction to health planning for developing countries (3rd Ed.)

London

: Oxford University Press.

Gruen

, R and

Howarth

, A. (2005). Financial management for health services. London:

Open University

.

Jiyenze

, M. K. (2013). Health care financing and resource allocation: handout for teaching

health

care financing.

Arusha

: CEDHA. [Notes: Unpublished]

Kutzin

, J (2001). A descriptive framework for country-level analysis of health care financing

arrangements

. Health Policy; 56, 171–204.

Reference

Tanzania

.

MoHSW

(2014). DHM Healthcare financing module. Dar

es

Salaam:

MoHSW

.

Mossialos

, et al (

ed

) (2002). Funding health care: options for Europe. Buckingham: Open

University

Press.

WHO

(2003). Mental health financing. Geneva. Switzerland: WHO.

World

Bank (1987). Financing health services in developing countries: an agenda for

reform

. Washington, D.C: World Bank

,.

World

Bank (1993). World Development Report 1993: investing in health. Oxford, UK:

Oxford

University Press.

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