Limitations in financing health systems

1. Limitations in financing health systems Conference “Innovations in Health Financing” Eduardo González Pier Mexico City, April 2004

2. Central message: How to align a financing scheme in order to achieve the objectives of health systems?

3. Contents • Responsibilities, objectives and components of health systems • Alternative financing • Risk allocation and payment mechanisms • Conclusions

4. Responsibilities and objectives of health systems Responsibilities Objectives Adequate care Governance Production of goods and services Income generation Health Financial Protection Financing

5. Classification of health assets • Epidemiolo-gical • surveillance • Environmental Services • Group services • Community outreach • Cooperation during disaster • Governance • Information and research • Community health services Public goods Health Assets Individual health care (medical attention) • Prevention • Diagnosis • Treatment • Rehabilitation

6. Responsibilities and objectives of health systems Head Responsibilities and components Governance Health Ministries Fund raising Vertical role alignment in accordance with each institution Affiliation Risk grouping Cancellation of risks Financing Community Services Fund allocation Individual health services 1 er N. 2 do N. 3 er N. Service Plural

7. 14% 12% 10% 8% 6% 4% 2% 0% EU Italia Perú Chile Brasil Japón Austria México Bolivia España Ecuador Uruguay Australia Alemania Colombia Argentina Honduras Rep. Dom Nicaragua Dinamarca Costa Rica Guatemala Reino Unido Level of investment in health Total health expenditure share of GDP (2000) Source: World Health Report 2002

8. 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.

9. Sources of pressure on a financial reform: Change and complexity demogra-phic transition epidemiolo-gical transition economic transformation urbanization political change (democratization) greater role of women in formal economy Pressures on expenditure and greater financial needs increased level of education technological / organiza- tional innovation

10. Contents • Responsibilities, objectives and components of health systems • Alternative financing • Risk allocation and payment mechanisms • Conclusions

11. Evaluation of alternatives: fund raising federal • local • Taxes payroll (social security) pre-payment • Private expenditure pocket-money

12. Structure of health expenditure 100 90 80 70 60 Porcentaje 50 40 30 20 10 0 EU Perú Italia Chile Brasil Japón Bolivia Austria México Francia España Canadá Uruguay Australia Alemania Colombia Argentina Dinamarca Costa Rica Reino Unido Gasto público Pre-pago Gasto de bolsillo Source: WHO, 2001.

13. Level of investment in health 10 ALE 8 SUE SUI FR CR BEL EU CZCH NOR NL AUS NZ RU FIN 6 ESP AUST GRE IT COL IRL Public expenditure in health/GDP POR ARG 4 VEN MEX CHI PER URU 2 BOL 0 0 10 20 30 40 50 Fiscal revenue/GDP Note: Public expenditure includes government expenditure, international subventions and from non governmental organizations, as well as social security funds. Source: World Bank, 2000

14. Evaluation of alternatives: criteria • Equality in financing • Meeting needs • Efficiency (allocation and system) • Accountability • Choosing capacity • Macro-efficiency • Political acceptance • Sustainability / stability (political and • economic)

15. Evaluation of alternatives: sources vs criteria

16. Contents • Responsibilities, objectives and components of health systems • Alternative financing • Risk allocation and payment mechanisms • Conclusions

17. Responsibilities and objectives of health systems Responsibilities Objectives Adequate care Governance Production of goods and services Income generation Health Financial protection Financing

18. Payment mechanisms • General budget • Budget by line-item • Capitation • Payment according to diagnosis • / result (intermediate) • Payment for services

19. Sources of income vs payment mechanisms                          

20. Payment mechanisms and incentives for suppliers Source: World Report on Health 2000, WHO

21. Classification of health assets • Epidemiolo-gical surveillance • Environmental services • Group services • Community outreach • Cooperation during disasters • Governance roles • Information and research • Community health services Public goods Health assets Individual health care (medical attention) • Prevention • Diagnosis • Treatment • Rehabilitation

22. Payment mechanisms vs types of health assets                  

23. Contents • Responsibilities, objectives and components of health systems • Alternative financing • Risk allocation and payment mechanisms • Conclusions

24. Conclusions Objectives of health systems Responsibilities Objectives Adequate care Governance Production of goods and services Income generation Health Financial protection Financing

25. Conclusions: How to align a financing scheme in order to achieve the objectives of health systems? Alternative financing Incentives for service suppliers Payment mechanisms Immediate results Incentives for service suppliers Final objectives