Financial Protection and Improved Access to Health Care: Peer-to-Peer Learning Workshop
Finding Solutions to Common Challenges
WHO building blocks: A WHO framework that defines the components of the health system. The six building blocks include: leadership, health care financing, health workforce, medical products, vaccines and technologies, information and research, and service delivery.
Universal Health Coverage: The goal of ensuring access to quality essential health services (including prevention, promotion, treatment and rehabilitation) for an entire population without risk of financial hardship or impoverishment. Requires determining who is covered in the population, for which services, and for what portion of the direct cost.
Health Financing: The process of managing health sector funds to maximize efficiency, equity, sustainability, and accountability. Health financing has three basic functions: revenue collection, pooling and purchasing. Financial management and improved alignment between health financing and public financial management systems is crucial to achieving health sector goals.
Financial risk protection: Security from incurring catastrophic costs in case an insured event occurs.
Primary Health Care: The provision of outpatient care, with a particular focus on ensuring the quality delivery of health interventions prioritized by countries and the global community against the highest disease burdens.
Secondary Health Care: Medical care provided by a specialist or facility upon referral by a primary care physician that requires focused knowledge and equipment.
Tertiary Health Care: Specialized consultative care usually for inpatients referred by primary or secondary physicians.
Benefits package: A defined set of services and products that can be aligned with a particular level of care (i.e., primary, secondary or tertiary health care services). The benefits covered are a major driver of the overall cost of the scheme and its public acceptability.
Clinical audit: A quality improvement process that seeks to improve patient care and outcomes through systematic review of care against set criteria. An audit can lead to the implementation of recommended changes
Health Insurance: Insurance as a concept guarantees benefits and protects the insured population from catastrophic health expenditure through some form of prepayment. Health insurance works best when risk pools are large and when the health risks associated with the covered population are diversified so that the healthy can subsidize the sick. Health insurance models are one way to describe how health financing systems are organized. Health financing systems can also be defined in part by characteristics of the three major health financing functions (See below). Insurance is itself comprised of a combination of various pooling, purchasing and revenue collection arrangements used to ensure the provision of a defined benefits package.
Some models of health insurance include:
- Social health insurance: Prepayment through employee payroll taxes and employer contributions, or other premiums paid by the population to a quasi-independent fundholder or agency. Delivered through a largely publically provided and administrated national system. Includes theoretically low fragmentation through larger national pools, and a strong concept of social solidarity.
- National health insurance: Prepayment for the population through general tax revenue, and delivered through a largely publically provided and administrated national system with theoretically low fragmentation. Is usually mandatory for all citizens.
- Mutuelles/Community based health insurance: Prepayment through premiums at the community level by community members to a community or association fundholder with varying arrangements for purchasing care. Can lead to fragmentation if there are no higher levels of pooling.
- Private voluntary health insurance: Prepayment of premiums by employers who purchase coverage for employees or by individuals who pay for services delivered by private for profit or not for profit companies or providers on a voluntary basis. Unregulated private health insurance can lead to escalating costs, competition for health and wealthy populations (cream skimming) avoidance of sick, poor populations, and fragmentation between public and private systems. However, well regulated private health insurance can improve competition and efficiency.
- Mixed systems: Contain elements of multiple models. For instance, social health insurance for public sector employees in combination with private voluntary insurance for private sector employees, and forms of cross-subsidization for lower economic quintiles.
Definitions by health financing function
Pooling: The accumulation and management of financial resources to ensure that the financial risk of having to pay for health care is borne by all members of the pool and not by individuals who fall ill.
- Copayment: A fixed payment defined in the insurance policy and paid by the insured person each time a medical service is accessed.
- Deductible: A fixed amount that must be paid out-of-pocket in a given year before an insurer will cover any expenses.
- Prepayment: Payment for healthcare before an illness occurs, such as through taxes or premiums.
- Premium: The amount to be charged for a certain amount of insurance coverage. The premium depends on the benefits to be covered by insurance (the benefits package), the cost of those benefits, and estimates of the likelihood that the insured individual or group will use the benefits.
- Risk: A measure of expected cost in the system. Increasing the size of a funding pool can help to spread financial risk. The main purpose of pooling is to spread the financial risk associated with health service utilization.
- Risk adjustment: A correction tool that uses a measure of risk variation to compensate health plans or health providers appropriately for the expected cost of providing necessary services for their enrolled population.
Revenue collection: Refers to the sources and mechanisms for raising funds in support of health.
- Domestic resource mobilization (DRM): Involves both generating and allocating more funds from within a country, as opposed to external sources such as grants and loans from development partners.
- General taxation: tax paid by society, a portion of which is put into health care
- General budget support: Funds collected by the Ministry of Finance from sources of domestic revenue and disbursed to the Ministry of Health or other health sector entities
- Earmarking: The practice of targeting new or existing streams of revenue for healthcare systems, programs, priorities, and/or populations
- Economic growth: An increase in the goods and services produced in the economy over a period of time. Increased economic growth is one way to increase fiscal space for health and publically subsidize provision of care
- Fiscal space: The availability of budgetary room that allows the government to provide resources for a given desired purpose without jeopardizing the sustainability of a government’s financial position. Defines the boundaries of a budget envelope. Fiscal space can be enhanced through various revenue raising techniques, as well as cutting expenditures, increasing efficiency, or borrowing.
- Fiscal sustainability: The ability for finances to be predictable, sufficient and responsive to need across time. Has four main characteristics: Solvency (government ability to finance existing and probable future liabilities and obligations); Growth (capacity of government to sustain economic growth over a period of time); fairness (ability to provide net financial benefits to future generations); stability (capacity of government to finance future obligations without increasing the tax burden)
- Innovative financing: refers to a range of non-traditional mechanisms to raise additional funds for development such as taxes, establishment of funds, public private partnerships, and market-based transactions
- Progressive: A measure of equity. Where a financing mechanism or its associated rate is adjusted to lessen the proportional impact on those with less financial means
- Regressive: A measure of inequity. Where a mechanism is not adjusted to lessen the proportional impact on those with less financial means
- Public Financial Management system: The rules governing how public budgets are created, disbursed and tracked
- Private revenue: Funds from individuals or institutions used for health care expenses
- Out-of-pocket health expenditure: Can be used interchangeably with direct payment. Includes the direct outlay of households, including gratuities and payments in kind, made to health practitioners and suppliers of pharmaceuticals, therapeutic appliances and other goods and services, whose primary intent is to contribute to the restoration or to the enhancement of the health status of individuals or population groups.
- Fee for service: Fee paid at the point of service outside of any formal pooling mechanism. This can include direct payments in the form of official sanctioned charges or unofficial/”under the table” payments
- Cost sharing: While most systems include an element of pooling funded by prepayment, this can also be combined with direct payment from individuals for a proportion of the cost at point of service
- Copay: Payment made by individuals at the point of service that represents a proportion of the actual cost of the service or product being obtained. Some form of insurance can cover the remaining portion
- Deductible: The additional amount of expenses that a health insurer will require to be paid before they will cover any expenses. Co-insurance reflects the proportion of cost that must be met out of pocket by the person who is covered
- Premiums: Charges paid in advance by members or employers into a formal mechanism, includes premiums and copays
- Private commercial sector contributions: Investment by the private sector (e.g. in health infrastructure, supply chain management), including through public-private partnerships
- External revenue: Funds from donors or other interests outside of a country that are used to fund health care expenses.
- Donor support: Grants and loans made through bilateral or multilateral channels for projects, direct budget support, or pooled mechanisms
- Private philanthropy: Donations given by private individuals or institutions either to local organizations or governments
Purchasing: The process of payment for health services. There are three main ways to do this, often used in combination:
- The government provides budgets directly to its own health service providers (integration of purchasing and provision) using general revenue and/or insurance contributions
- An institutionally separate purchasing agency (e.g. a health insurance fund or government authority) purchases services on behalf of the population (purchaser-provider split)
- Individuals pay providers directly for services.
- Purchaser: An entity that transfers pooled health care resources to providers to pay for services for a defined population. Purchasers can include health ministries, social insurance funds, private insurance funds, and other entities that manage health funds on behalf of the population
- Provider: One who is authorized to perform and be reimbursed for health care services. Providers may operate as individuals or part of a provider organization (such as a provider network or association of health care facilities)
- Capitation (per capita): Providers are paid a fixed amount in advance to provide a defined package of services for each enrolled individual for a fixed period of time
- Diagnostic related groups (case based): Hospitals are paid a fixed amount per admission or discharge depending on the patient and clinical characteristics, which may include department of admission, diagnosis, and other factors
- Fee for service (tariffs or fixed fee schedule): Providers are paid for each individual service delivered. Fees or tariffs are fixed in advance for each service or bundle of services
- Global budget: providers receive a fixed amount for a specified period to cover aggregate expenditures to provide an agreed-upon set of services. The budget can be spent flexibly and is not tied to line items.
- Line item budget: Providers receive a fixed amount for a specified period to cover specific input expenses (e.g. personnel, medicines, utilities). The budget in not flexible and expenditure must follow line items
- Per Diem: Payment of a fixed amount per day for each admitted patient (for instance, to a hospital). The per diem rate may vary by department, patient, clinical characteristics, or other factors
- Claims: Statement for cost of services rendered by healthcare providers, hospitals, or facilities. Claims are prepared and submitted for payment as a part of the billing process by the provider or the plan member to the health care purchaser. Some systems, such as capitation or global budgeting, eliminate the need for claims.
- Incentive: An economic signal that directs individuals (e.g., health workers) or organizations (e.g., health provider institutions) toward self-interested behavior. The incentives created by a provider payment system will affect provider decisions about the services they deliver, how they deliver them, and the mix of inputs they use for delivery
- Organizational structure: A framework within which an organization arranges its lines of responsibility and authority, relationships, and communications among members, and their rights and duties. Determines the manner and extent to which roles, power and responsibilities are delegated, controlled and coordinated.
- Results based financing: an instrument to link financing to pre-determined results, with payment made only upon verification that the agreed-upon results have actually been delivered.Provider payment: The allocation of resources to a health care provider to deliver the covered package of health care goods, services, and interventions to the covered population
Why health insurance matters
- Value for Money: A way of thinking about whether spending on health services is linked to desired, quality outcomes from the perspective of beneficiaries, providers, governments and donors. It is comprised of efficiency, effectiveness, and equity.
- Efficiency: refers to the production of as many good quality health services as possible with available resources. Allocative efficiency involves allocating resources in a way that provides an optimal mix of goods and services, and therefore maximizes benefits to society. Technical efficiency involves using the least amount of resources or the right combination of inputs to produce a desired mix of goods and services
- Effectiveness: Health services that achieve their intended outcomes with least cost
- Equity: Ensuring that all groups have fair and just access to needed resources and can achieve optimal outcomes
- Financial protection: The cost of health services does not put people at risk of catastrophic health expenditure
- Redistribution: a means of transferring income from some individuals to others by means of a social mechanism. Examples include cross-subsidization of health care for the poor from contributions paid by wealthier quintiles
- Solidarity: Agreement amongst individuals with a common interest towards a social goal, such as providing Universal Health Coverage regardless of ability to pay
- Access: Ensuring that the population can obtain health care according to need in a way that is free from physical and financial barriers
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