1. Harvard University Initiative for Global Health Global Health Challenges Social Analysis 76: Lecture 21

2. Harvard University Initiative for Global Health A Framework for Thinking about Health Systems Main Financing Mechanisms Household Impact Some Debates

3. Harvard University Initiative for Global Health Sao Tome & Prince Georgia Cuba Japan Malta USA

4. Harvard University Initiative for Global Health WHO Definition of Health System All actors, institutions and resources that undertake health actions. Health actions: all actions whose primary intent is to improve health.

5. Harvard University Initiative for Global Health Not all policies and actions that have an important influence on health, such as educating young girls or poverty reduction programs, are part of the health system according to this definition. A wide range of actions targeting individuals and communities would meet this definition: from surgery to campaigns to raise tobacco taxes to random breath testing for drunk driving. Primary Intent

6. Harvard University Initiative for Global Health Societies collectively have many goals such as raising purchasing power, reducing poverty, raising educational levels, ensuring democratic participation and improving health. Health systems can positively or negatively affect many social goals. Likewise, many social systems such as education can have a positive or negative impact on health. Social Goals to Which Health Systems Contribute

7. Harvard University Initiative for Global Health HEALTH SYSTEM GOALS Health Responsiveness Fairness in Financial Contribution LEVELDISTRIBUTION QualityEquity Efficiency

8. Harvard University Initiative for Global Health Framework Inputs Health System Functions –Financing –Resource Generation –Provision Including Coverage –Stewardship

9. Harvard University Initiative for Global Health Framework (II) Health System Contribution to Social Goal –Average Level of Health –Health Inequalities –Responsiveness –Fairness in Financial Contribution Efficiency

10. Harvard University Initiative for Global Health Stewardship (oversight) Financing (collecting, pooling and purchasing FUNCTIONS THE SYSTEM PERFORMS GOALS / OUTCOMES OF THE SYSTEM Health Fair financial contribution Responsiveness (to people’s non-medical expectations) Creating resources (investment and training ) Delivering services (provision)

11. Harvard University Initiative for Global Health Stewardship The careful and responsible management of the well-being of the population. Responsibility of government working with a wide range of partners. Stewardship does not necessarily mean direct provision of services but influencing the behaviour of health system actors, public and private.

12. Harvard University Initiative for Global Health Relationship between Coverage and Outcomes Intersectoral action Other factors Non-personal health services Personal medical services COVERAGECOVERAGE HEALTH

13. Harvard University Initiative for Global Health Health System Effective Coverage Fraction of potential health gain that could be delivered by the health system that is delivered.

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15. What determines effective coverage? Price of health care Perceived need and knowledge Geographic proximity of providers - travel time Cultural and social acceptability of intervention - responsiveness of health systems Availability of necessary technology and resources Technical quality of providers Choice of an intervention Adherence Demand on health care Quality of providers Health outcomes

16. Harvard University Initiative for Global Health A Framework for Thinking about Health Systems Main Financing Mechanisms Household Impact Some Debates

17. Harvard University Initiative for Global Health Total Developing 402; 13% Global Expenditure on Health, 2002 (US$ Billions) Total: 3,224

18. Harvard University Initiative for Global Health Health spending around the world, 2000 * (measured share of GDP, %) The boundaries and names shown and the designations used on this map do not imply the expression of any opinion whatsoever on the part of the World Health Organization concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Dotted lines on maps represent approximate border lines for which there may not yet be full agreement. © WHO 2002. All rights reserved

19. Harvard University Initiative for Global Health 1)General taxation 2)Social insurance – payroll taxes 3)External assistance 4)Private insurance 5)Out-of-pocket payments 6)Direct care from private organizations Main Revenue Generation Mechanisms

20. Harvard University Initiative for Global Health Composition of health expenditure

21. Harvard University Initiative for Global Health In many European and Latin American countries, social insurance developed in the 1930s or later. Formal sector employees were given social insurance nominally paid by the employer, employee and government. From an economic point of view, this is a type of tax. In some countries, dedicated networks of health service providers owned by the social insurance agency were created. Social Insurance

22. Harvard University Initiative for Global Health Voluntary private insurance generates greater than 20% of total health revenue only in 6 countries in the world: Brazil, Chile, Uruguay, South Africa, Namibia and the USA. In all other developed countries, voluntary private insurance plays a small role mostly for boutique outpatient care. There is some debate as to whether mandated private insurance is designated as social insurance in countries such as Switzerland. Voluntary Private Insurance

23. Harvard University Initiative for Global Health The most controversial mechanism for funding health systems is user fees or out-of-pocket payments. User fees were strongly promoted by the World Bank in the late 1980s as a mechanism to increase provider productivity. They have become a rallying point for criticism of the World Bank and USAID. OOPS – User Fees

24. Harvard University Initiative for Global Health Low-income countries are limited in their capacity to raise taxes – personal income tax has a limited role, most revenue is from excise and customs, corporate taxes, or consumption taxes. High fraction of the workforce in the informal sector has in general limited social insurance schemes often only to civil servants. Government Spending

25. Harvard University Initiative for Global Health To increase revenue collection in settings where the tax base is limited, three types of approaches have been proposed. 1)Increased use of user fees – despite a number of USAID and World Bank initiatives to introduce user fees the effect on revenue generation has been limited. China is an exception. 2)Community health insurance – local non-profit health insurance schemes. Popular movements in West Africa. 3)Increased external assistance. Raising Revenue in Low-Income Countries

26. Harvard University Initiative for Global Health A Framework for Thinking about Health Systems Main Financing Mechanisms Household Impact Some Debates

27. Harvard University Initiative for Global Health Health Financing Contribution (HFC) i i i ENSI HE HFC 

28. Harvard University Initiative for Global Health Russia: The distribution of Health Financing Contribution Fraction Health financing contribution 0.2.4.6.81 0.2.4.6.8 1

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30. Systems that primarily use taxes or social insurance protect households, particularly poor households, most effectively from catastrophic health payments. Risk Pooling

31. Harvard University Initiative for Global Health A Framework for Thinking about Health Systems Main Financing Mechanisms Household Impact Some Debates

32. Harvard University Initiative for Global Health There is overwhelming cross-sectional and intervention evidence that poor households in developing countries have reduced access to care due to price. Prepaid mechanisms (taxes, social insurance, private insurance) maximize financial access. Huge variation in access across systems using risk pooled financing mechanisms due to geographic and other resource allocation decisions. Financing and Access

33. Harvard University Initiative for Global Health Resource allocation decisions by government or social insurance authorities tend to favor major urban areas. Inverse care law – areas and groups that need the most healthcare get the least. To protect against this type of ‘capture’, some countries have introduced risk-adjusted capitation formulas to guide resource allocation. Resource Allocation

34. Harvard University Initiative for Global Health Proponents of user fees argue that the negative effects of user fees on financial access of the poor can be mitigated through the use of a sliding fee schedule and means testing. To date, efforts to offer lower prices to the poor have been difficult to administer: either there is little overall revenue generation, extensive corruption or reduced access. User Fees and Means Testing

35. Harvard University Initiative for Global Health User fees do not appear to raise significant revenue and decrease access for the poor. But do user fees retained by the provider enhance productivity and the quality of services? Very limited evidence that user fees lead to increased quality/productivity. User Fees Debate

36. Harvard University Initiative for Global Health Ugandan user fees had different effects Median monthly consultations 11 Health Units in Kabarole District, Uganda Source: Kipp, et al, Bulletin of WHO, 2001. 0 2000 4000 6000 8000 Butiiti Kasule Kicheche Kyegegwa Nyabani Nyamabuga Rukunyu Ruteete Kamwenge Kisomoro Rwimi Before user fees After user fees Rural DistrictsUrban Districts