Health System Financing 1 |1 | Designing Health Financing System to Achieve Universal Coverage Ke Xu Health Systems Financing World Health Organization November 2008, Shanghai

Health System Financing 2 |2 | Universal Coverage as a Policy Objective defined as everyone having access to appropriate care when they need it and at affordable cost implies financial risk protection and equity of access associated with equity in financing ( contribution according to ability to pay) Resolution "Sustainable Health Financing, Universal coverage and Social Health Insurance" May Geneva

Health System Financing 3 |3 | Three Dimensions of Universal Coverage

Health System Financing 4 |4 | Universal Coverage Getting the Mix Right Revenue collection Pooling Purchasing Collect funds (taxes or contributions) efficiently and equitably Costs are shared by all and not borne by people when they are ill wealthy & healthy subsidize the poor & sick Buy or provide effective health interventions Incentives for efficiency

Health System Financing 5 |5 | Revenue Collection Sustainability Is the money collected in an equitable way? Does the collected sufficient? Efficiency Equity How much I pay and how much others pay? How to collect a sufficient amount of money with minimum administrative cost?

Health System Financing 6 |6 | Health care services Tax-based financing Social health insurance Other prepayment schemes Out-of-pocket payments 1. General tax or other revenue 2. Payroll tax 3. Contribution or premium 4. Direct payment Household External resource Financing mechanismsFinancing sources Natural resource revenue Health Financing Mechanisms

Health System Financing 7 |7 | Revenue Collection Generally a mix of different types of revenue collection mechanisms co-exist: –Tax based funding General taxation, earmark taxes –Compulsory insurance Payroll tax and contribution Formal and informal sector employees Dependants –Voluntary insurance

Health System Financing 8 |8 | Social Health Insurance- Constrain Factors Income level and growth The structure of the economy The distribution of the population Administrative capacity Solidarity Stewardship

Health System Financing 9 |9 | Funds Pooling How far can solidarity go ? How far can solidarity go ? –What level of cross-subsidies from rich to poor and from healthy to ill? –Any role for supplementary or complementary health insurance ? –Should opt-out be allowed (Latin America, Germany)? risk-equalisation How many pools-risk adjustment/ risk-equalisation? –One pool (Korea, Turkey) –Multiple pools (Germany, Netherland, Switzerland…) –Fragmentation and segmentation How should tax-based funding be channeled? –To provider (Latin American countries)-low price services –To insurance funds- low insurance premium –To consumers (cash transfer)- to purchase services or insurance

Health System Financing 11 | Purchasing Strategic purchasing Provider payment mechanisms Outpatient service Inpatient service Drugs High-tech medical equipments Benefit package design Differentiate cost sharing among different services and drugs No over provision No over utilization

Health System Financing 12 | By Pia Schneider: Provider Payment Reforms: Lessons from Europe and America for South Eastern Europe

Health System Financing 13 | The Design Features of Benefit Package The size of benefit package Budget constrain Risk protection Width Structure Depth The number of services Cost-sharing What services and how much

Health System Financing 14 | OOP Components by Quintiles (Korea, 2007)

Health System Financing 15 | Catastrophic Expenditure by Different Payments (Korea)

Health System Financing 16 | Percentage of Households Reporting Non-zero Inpatient Expenditure (Korea, 2007)

Health System Financing 17 | Out-of-pocket spending Mixes of community cooperative and enterprise based health insurance, other private health insurance, SHI type coverage for specific groups and limited tax based financing Absence of financial protection Intermediate stages of coverage Universal Coverage Tax-based financing Social health insurance Mix of tax-based and various types of health insurance Increase prepayment Stages of Coverage and Organisational Mechanisms Reduce out-of-pocket payments

Health System Financing 18 | How Long It Takes to Reach Universal Coverage? Time (in years) between first social protection law and universal coverage Costa Rica20 Republic of Korea 26 Japan36 UK36 Austria79 Belgium118 Germany127

Health System Financing 19 | Summary 1.Achieving universal coverage takes time, a long-term vision is important 2.Revenue collects through equitable and efficient ways 3.Increase prepayment and reduce out-of-pocket payment 4.Improve financial risk protection through an appropriate benefit package 5.Improve service quality and control cost through a set of provider payment mechanisms.

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