Health financing in low and middle income countries: a rapid guide

1. LIHS Mini Master Class Health financing in low and middle income countries: a rapid guide Tim Ensor

2. Established market economies • Most rich countries have achieved ~100% coverage – (near 100% of population are insured for a majority of health care needs). Main systems: • Beveridge system: tax-funded system based on residency (e.g. New Zealand, UK) • Bismark system: compulsory payroll contributions (social insurance) based on employment status (but with a heavy tax contribution for those not in employment) (e.g. Germany, Austria)

3. Low & middle income countries (LMICs) • Most LMICs have (often post-colonial) tax funded systems • These are often unable to cope with demands placed on health services (unfunded promises) leading to: • Queues, stock-outs • Unofficial payments and official charges (particularly from 1980s – IMF/World Bank driven austerity) in public sector • Dependence on private sector (provision and funding) • Poor: Forced to go to private (often untrained) sector • Rich: Choose to go to private (plenty of supplier induced demand) • Not only is funding low but most of it is channelled as direct patient payments

4. Where does a woman give birth in Indonesia? Demographic and Health Survey, 2009

5. Not only is funding low but most of it is channelled as direct patient payments(% distribution, $ PPP per capita) 2010 extracted from WHO database

6. Pooled, public funding saves livese.g. Lancet, 2012 [1]- evidence on improved child and adult outcomes 1. doi:10.1016/S0140-6736(12)61039-3

7. How does a low income country increase financial coverage of health care needs? • Social insurance schemes • Popular in Latin America, Eastern Europe-FSU and parts of Asia • Requires identification, assessment and collection • Structure of the workforce is a major impediment

8. How does a low income country increase financial coverage of health care needs?(cont.) 2. Community based health insurance – based on voluntary, fixed premiums and focused on informal sector • Organised by health facilities, NGOs and communities themselves • Expensive to administer • Vulnerable to shocks • Difficult to enrol the low risk (adverse risk selection) • Tend to start small and stay small • Often little money raised but helps to increase understanding of health services, needs and rights

9. Neither of these mechanisms offer a complete approach to increasing coverage.Debate now focuses on two main UHC strategies…..

10. Back to… Bismark or Beveridge? • Free care policies that deliver universal access to a limited range of services (by level, care package or ownership) AND expect private care seeking by patients and dual practice by practitioners • e.g. Sri Lanka, Sierra Leone • Link and consolidate schemes – combine compulsory and voluntary schemes but expect to heavily subsidise systems through taxation • e.g. Thailand, Ghana

11. Which is best? • Free care Universal approaches areeasier to manage and probably more equitable • Link and consolidate Linking up existing schemes perpetuates inequalities, unpopular with international agencies, iNGOs and academics but may: • be more acceptable to those expected to pay • permit greater local flexibility over resource use

12. Further Information • WHO http://www.who.int/universal_health_coverage/en/ • Lancet issue on Universal Health Coverage http://www.thelancet.com/themed-universal-health-coverage • Community based health insurance SPAAN, E., MATHIJSSEN, J., TROMP, N., MCBAIN, F., TEN HAVE, A. & BALTUSSEN, R. 2012. The impact of health insurance in Africa and Asia: a systematic review. Bull World Health Organ, 90, 685-92. LIHS Mini Master Class