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Limitations in financing health systems
Conference “Innovations in Health Financing”
Eduardo González PierMexico City, April 2004
Central message:
How to align a financing scheme in order to achieve the objectives of health systems?
Contents
1. Responsibilities, objectives and
components of health systems
2. Alternative financing
3. Risk allocation and payment mechanisms
4. Conclusions
Responsibilities Objectives
Health
Governance
Financing
Income generation
Adequate care
Production of goods and services
Financial Protection
Responsibilities and objectives of health systems
• Prevention• Diagnosis• Treatment• Rehabilitation
Individual health care (medical attention)
• Governance• Information and
research• Community health
services
Public goods
Health Assets
Classification of health assets
• Epidemiolo-gicalsurveillance
• Environmental Services
• Group services• Community
outreach• Cooperation
during disaster
Responsibilities and objectives of health systems
Cancellation of risks
Service
Governance Health MinistriesF
ina
nc
ing
Fund raising
Vertical role alignment in accordance with each institution
Responsibilities and components Head
AffiliationRisk
grouping
Fund allocation
Plural
CommunityServicesIndividual health services
1 er N.
2 do N.
3 er N.
Level of investment in health
Total health expenditure share of GDP (2000)
Source: World Health Report 2002
0%
2%
4%
6%
8%
10%
12%
14%E
cua
do
r
Nic
ara
gu
a
Gu
ate
ma
la
Pe
rú
Mé
xico
Re
p.
Do
m
Co
sta
Ric
a
Bo
livia
Ho
nd
ura
s
Ch
ile
Re
ino
Un
ido
Esp
añ
a
Jap
ón
Au
stria
Ita
lia
Bra
sil
Din
am
arc
a
Au
stra
lia
Arg
en
tina
Co
lom
bia
Ale
ma
nia
Uru
gu
ay
EU
Public investment in health
Source: World Bank, 2000 and WHO, 2000.The GNP per capita variable was used as an approximation to the GDP per capita.
-
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
2,0 3,0 4,0 5,0 6,0 7,0 8,0 9,0 10,0 11,0
Ln(PIB per cápita)*
Gas
to t
ota
l en
sal
ud
/PIB
CRICA
COL DIN
BOL
CHIN
PERU
BRACHI
MEX
URU
ARG
ESP
RU
FRA
EUA
AUST
AUS
ALE
ITA
CAN
JAPON
Sources of pressure on a financial reform: Change and complexity
Pressures on expenditure and greater financial
needs
epidemiolo-gical transition
economic transformation
political change (democratization)
technological / organiza-tional innovation
greater role of womenin formal economy
increased level of education
urbanization
demogra-phic
transition
Contents
1. Responsibilities, objectives and
components of health systems
2. Alternative financing
3. Risk allocation and payment mechanisms
4. Conclusions
1. Taxes
pocket-money
payroll (social security)
pre-payment
Evaluation of alternatives: fund raising
local
federal
2. Private expenditure
Gasto público Pre-pago Gasto de bolsillo
Structure of health expenditure
0
10
20
30
40
50
60
70
80
90
100C
hile
EU
Uru
guay
Méx
ico
Bra
sil
Col
ombi
a
Arg
ent
ina
Per
ú
Bol
ivia
Aus
tral
ia
Can
adá
Aus
tria
Ita
lia
Ale
man
ia
Fra
ncia
Esp
aña
Cos
ta R
ica
Japó
n
Din
amar
ca
Rei
no U
nid
o
Po
rcen
taje
Source: WHO, 2001.
Note: Public expenditure includes government expenditure, international subventions and from non governmental organizations, as well as social security funds. Source: World Bank, 2000
Fiscal revenue/GDP
50403020100
Pu
blic
ex
pen
dit
ure
in h
ea
lth
/GD
P 10
8
6
4
2
0
VEN
URU
EURU
SUI SUE
ESP
POR
PER
NORNZ NL
MEX
ITIRL
GRE
ALE
FR
FIN
CZCHCR
COL
CHI
BOL
BEL
AUSAUST
ARG
Level of investment in health
1. Equality in financing
5. Choosing capacity
3. Efficiency (allocation and system)
4. Accountability
Evaluation of alternatives: criteria
2. Meeting needs
6. Macro-efficiency
7. Political acceptance
8. Sustainability / stability (political andeconomic)
Evaluation of alternatives: sources vs criteria
Federal taxes
Local taxesPayroll taxes (social
security)
Private pre-
payment
Pocket-money
expenditureEquality in financing
Meeting needs
Allocation efficiency
++++++++
-+/---
Political acceptance
Economic stability
Political stability
System efficiency
Accountability
Choosing capacity
Macro efficiency
+++
---
+/-
+++----
--
+++
++++
-
+/-
-----
-- -
-----+/-
+/-
++++++++
+/-
-
++
++
-+++/-
++ +++
+/-++-/+
+++
+++
------------
Contents
1. Responsibilities, objectives and
components of health systems
2. Alternative financing
3. Risk allocation and payment mechanisms
4. Conclusions
Responsibilities Objectives
Health
Governance
Financing
Income generation
Adequate care
Production of goods and services
Financial protection
Responsibilities and objectives of health systems
Payment mechanisms
• General budget
• Budget by line-item
• Capitation
• Payment according to diagnosis / result (intermediate)
• Payment for services
Sources of income vs payment mechanisms
General budget
Budget by line-item
Capitation Payment according to diagnosis /
result
Payment for services
General tax
Local tax
Payroll tax
Private pre-
payment
Pocket-money
expenditure
Incentives
Mechanisms
Prevention Activity Care / quality Cost containment
General budget ++ - - +/- +++Budget by line-
item +/- - - +/- +++Capitation +++ - - ++ +++Payment
according to diagnosis
+/- ++ ++ ++
Payment for services +/- +++ +++ ---
Payment mechanisms and incentives for suppliers
Source: World Report on Health 2000, WHO
• Prevention• Diagnosis• Treatment• Rehabilitation
Individual health care (medical attention)
• Governance roles• Information and
research• Community health
services
Public goods
Healthassets
Classification of health assets
• Epidemiolo-gical surveillance
• Environmental services
• Group services• Community
outreach• Cooperation
during disasters
Public goods Health care
to the community to the individual
General budget
Budget by line-item
Capitation
Payment by diagnosis
Payment for service
Payment mechanisms vs types of health assets
Contents
1. Responsibilities, objectives and
components of health systems
2. Alternative financing
3. Risk allocation and payment mechanisms
4. Conclusions
Responsibilities Objectives
Health
Governance
Financing
Income generation
Adequate care
Production of goods and services
Financial protection
ConclusionsObjectives of health systems
Alternative financing
Conclusions: How to align a financing scheme in order to achieve the objectives of health systems?
Payment mechanisms
Incentives for service
suppliers
Incentives forservice
suppliers
Immediate results
Final objectives