HEALTH FINANCING - COHRED

[Pages:93]HEALTH FINANCING

Learning from Experience: Health care nancing in lowand middle-income countries

Diane McIntyre

Learning from Experience: Health care financing in low- and middle-income countries

? Global Forum for Health Research 2007 Published by the Global Forum for Health Research, June 2007

ISBN 2-940286-53-1

Suggested citation: Diane McIntyre, Learning from experience: health care financing in low- and middle-income countries, Global Forum for Health Research, Geneva, 2007

Keywords: 1. Health care financing. 2. Health financing systems. 3. Low- and middle-income countries. 4. Developing countries. 5. Health insurance. 6. Equity.

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Learning from Experience:

Health care financing in lowand middle-income countries

By Diane McIntyre

Health Economics Unit, University of Cape Town, South Africa

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Acknowledgements

This report was written by Diane McIntyre, University of Cape Town, South Africa, and the work carried out under the general direction of Sylvie Olifson-Houriet of the Global Forum for Health Research in Geneva, Switzerland.

We would like to acknowledge the helpful comments and contributions of the peer reviewers - Eleonora Cavagnero, Tim Ensor, Adam Leive and George Schieber. We also extend our thanks to Guy Carrin, Andr?s de Francisco and Stephen Matlin, who provided constructive comments, and to Abdul Ghaffar, Lakshmi Sundaram and other colleagues who contributed to the conceptualization of the project. Any errors or omissions, however, are the sole responsibility of the author. Thanks are also due to John Maurice for editing this report.

We believe that the subject is important and deserves more attention than it has received to date ? attention that ideally should be followed by concerted action. We hope that others, particularly national-level policy-makers striving to improve the equity, efficiency and sustainability of health care financing in their country, will find the report of value.

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Foreword

Despite impressive progress since 1950, huge challenges remain in the effort to improve health outcomes in developing countries and achieve related goals concerning universal coverage, basic needs, equity, inclusion, risk protection and reaching poor and marginalized groups. One of these challenges is how health should be financed ? who should pay how much and through what arrangements, given the reality that the services and other actions needed to attain desired health results inevitably involve costs that must be financed somehow.

This is no simple matter. Developing countries' public, private and civil society sectors, together with external donors and other partners, act as financiers and/or providers of health services. Funds are mobilized through taxes, social security/insurance systems, fees, grants, loans and other revenue-generating instruments, and flow through budgets and various off-budget channels. The public and private choices that are made in this complex space have profound implications not just for which groups bear what share of the costs, but also for who actually gets services and in what quantity and quality.

Diane McIntyre captures here the state of thinking and evidence on health care financing choices and their impact in developing countries, and points out that a hardwon consensus has been achieved in the field. There is now little doubt that prevailing systems that rely heavily on out-of-pocket fees ? with all their adverse effects, including their impoverishing effect on vulnerable households ? are too dominant now and need to give way to more modern solutions drawing on prepayment and integrated risk pools.

Her analysis provides sufficient details to demonstrate clearly the complex issues under discussion. Useful country examples are employed to illustrate points made in the text, a summary policy recommendation table is provided in the conclusions, and policy guidance is practical and specific.

The hard-won technical consensus now needs to be communicated clearly and effectively. At the Health Financing Task Force (), we are committed to doing just that, promoting the application of evidence-based health financing policies in developing countries. Dr McIntyre's work provides an excellent example of what can and should be done to move things forward.

David de Ferranti Chair, Health Financing Task Force

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About the author

Diane McIntyre (PhD) is Professor at the University of Cape Town, South Africa. She founded the Health Economics Unit in 1990 and was its director for 13 years. She has served on numerous policy committees and has extensive experience in research, technical support and capacity development in South Africa and other parts of Africa. Her experience in research and technical support has focused mainly on health care financing, health equity, resource allocation, public-private mixes and pharmaceutical regulation.

The author Diane McIntyre

Table of contents

Acknowledgements Foreword About the author Abbreviations and acronyms Glossary Executive summary

1 Introduction

2 Main mechanisms of health care financing

Government funding Health insurance

Mandatory health insurance Voluntary health insurance Out-of-pocket payments

3 Assessing financing mechanisms

Feasibility Equity Efficiency Sustainability

4 Key functions of health care financing

Revenue collection Sources of funds Contribution mechanisms General tax revenue Health insurance Donor funding Types of collecting organizations

Pooling of funds Coverage and composition of risk pools Allocation mechanisms

Purchasing The benefit package Type of service Type of provider Affordability and sustainability

ii iii iv vii viii xiii

1

3

3 3 3 3 4

5

5 5 6 6

7

8 9 10 11 18 22 25 25 26 33 37 37 37 40 40

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Service delivery infrastructure

42

Provider payment mechanisms

42

5 Conclusions

45

Appendix A: Financial protection for the poor

49

Appendix B: Key macroeconomic, health and health care expenditure

53

indicators

R?sum?

59

Resumen

61

Sum?rio

63

65

References

67

Boxes

Box 1: Case study: removal of user fees in Uganda

12

Box 2: Implications of private health insurance for tax revenue in South Africa

16

Box 3: Case study: benefits to the health sector of debt relief in Nigeria

19

Box 4: Case study: mandatory insurance in Costa Rica

20

Box 5: Case study: a SWAp in Bangladesh

24

Box 6: Case study: general tax funding as a basis for universal health coverage

27

in Sri Lanka

Box 7:

Case study: mandatory health insurance as the basis for universal coverage 29 in Ghana

Box 8: Examples of countries using a needs-based resource allocation formula

34

Box 9: Case study: equitable distribution of health care benefits in Thailand

38

Box 10: Case study: contracting for health services in Colombia

41

Box 11: Case study: accessing benefits in the Bwamanda CBHI scheme in the

43

Democratic Republic of Congo

Figures

Figure 1: Proportion of GDP spent on public health compared to military spending 17

Figure 2: Government expenditure on debt servicing and public health in selected 18 countries

Figure 3: Hypothetical allocation of health care resources between districts

36

Tables

Table 1: Advantages and disadvantages of different provider payment mechanisms 44

Table 2: Summary of key issues in health care financing

47

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