Chapter 7: Health Systems: principled integrated care
Financing health systems
Many of the functions of health care systems depend on adequate financing. If sustainable financing mechanisms are not put in place, innovative ideas for strengthening the primary health care base of health care systems will not yield results.
Globally, health spending has grown substantially over the last 25 years, driven largely by rapid changes in technology and increasingly complex institutions for financing and delivering care. Yet in the world's poorest countries, health spending has grown slowly, if at all. Consequently, there is great inequality in global health spending today (see Figure 7.2). Countries of the Organisation for Economic Co-operation and Development accounted for less than 20% of the world's population in the year 2000 but were responsible for almost 90% of the world's health spending. The African Region accounts for about 25% of the global burden of disease but only about 2% of global health spending (see Annex Tables 4 and 5).
While spending levels have changed, the options for financing health systems have not. In 1978, WHO discussed the same financing sources that are being debated today, namely general taxation, earmarked taxes, social security, community-based financing, fees, and external assistance (46). Applied policy studies are still lacking, however. For example, a recent review of 127 studies on community health insurance schemes found that only two of them had sufficient internal validity to enable conclusions to be drawn regarding the impact on utilization and financial protection (47). Without reliable information, health financing policies continue to be dominated by opinions rather than evidence.
Developing sustainable financing
Policy decisions about financing mechanisms have multiple effects. They influence how much money can be mobilized, how equitably those resources are raised and applied, and the efficiency of the resulting services or interventions. The context within which health financing operates will significantly alter its effects. However, the principles for improving health financing are essentially the same everywhere: reduce the extent to which people have to make large out-of-pocket payments at the point of service; increase the accountability of institutions responsible for managing insurance and health care provision; improve the pooling of health fund contributions across rich and poor, healthy and ill; and raise money through administratively efficient means. The key policy questions relating to health financing are very different, however, in rich and poor countries. Thus, the following discussion will consider high-income, middle-income, and low-income countries separately.
In high-income countries, with per capita incomes above US$ 8000, resources for health are relatively plentiful though not necessarily equitably distributed. An average of 8% of national income is spent on health. Among these countries, annual health spending ranges from US$ 1000 to more than US$ 4000 per capita. The issues that dominate discussions of health financing relate largely to the effectiveness of spending, cost containment and equity.
In middle-income countries, with per capita incomes between US$ 1000 and US$ 8000, resources are more constrained and health services are less widely accessible. Countries in this category spend between 3% and 7% of national income on health, representing an annual expenditure of between US$ 75 and US$ 550 per capita. In these countries, the health financing system is often a critical obstacle to making health interventions accessible to all. Frequently the population is segmented between those in government or formal sector employment who benefit from relatively well-financed health insurance schemes, and those who rely on more poorly funded ministry-run services or pay out of pocket for private care. Many of these countries, notably in Asia, mobilize very little through the public sector.
In low-income countries, with annual per capita income of less than US$ 1000, health financing discussions are dominated by the fundamental constraint of too few resources. In most of these countries, only 1--3% of gross domestic product is spent on health and, because their per capita income is so low, this translates into health spending per capita of between US$ 2 and US$ 50. Even if these countries spent 10% of their income on health services, the investment, if spread equitably across the population, would suffice only for very rudimentary health care.
Public policy should not allow fees at point of service to become an obstacle for obtaining necessary care, or become a catastrophic financial burden on households. In practice, policies on fees depend on the population's capacity to pay, its impact on utilization, the kinds of services being provided, and the impact of fees on the quality and availability of services. In cases where service quality can be maintained or improved, eliminating fees may increase access. This appears to be the recent experience in Uganda, where user fees were eliminated because the government simultaneously increased its financial and managerial support. In cases where service quality cannot be maintained or improved by other means, fees can provide critical incentives and resources to keep services available. This appears to have been the experience with the Bamako Initiative when the retention of fees helped to ensure the availability of drugs even if other programmes were ineffective (48). Therefore, public policy toward fees must be pragmatic, based on full consideration of the context and the net impact on the population's access to good-quality health services.
Sustaining the health system without relying heavily on fees requires the mobilization of other sources, including general and earmarked taxes, social insurance contributions, private insurance premiums, or community insurance prepayment. In practice, the use of particular sources will depend on the population's capacity to pay, administrative capacities to collect, the kinds and quality of services that are made available, and the effectiveness of existing institutions and forms of financing.
In low-income countries, general taxation is a very attractive way to build a strong public role in health service delivery, because it is administratively easier to manage than more complex insurance or regulatory arrangements. Nevertheless, general taxation only works if the tax base is broad, tax administration is effective, and funds are allocated to health services and used well. If any one of these factors is missing, the more effective alternative may be to establish an independent social insurance administrator or encourage the formation of community insurance programmes. Pragmatism is a useful guiding principle in finding ways to mobilize and apply resources to improve health.
Unblocking system bottlenecks
Much progress has been made in rationalizing the choice of priority interventions since the time of the standard "minimum package" of the early 1990s. New tools are now available. For example, the WHO-CHOICE project is a database on the health impact and costs of a large number of health interventions -- preventive, promotive, curative and rehabilitative (49). Prioritizing cost-effective interventions is all the more important as new funds become available to the health sector. Care must be taken to ensure that external funding is additional to, and not a substitute for, domestic financing, but also that financing which flows from outside sources does not lead to (further) fragmentation of the national health system.
New funds remove only one of the obstacles to equitable, universal health care provision. Institutions receiving increased funds, whether governmental or nongovernmental, must improve programme implementation. Trained staff, information systems, audit mechanisms, and financial controls must be strengthened to handle the increased financial flow.
Thus, while resource mobilization remains a challenge, the results-driven allocation of resources also requires new strategies. Effective management of the new funds now becoming available to the health sector, particularly in sub-Saharan African countries, requires innovative approaches to medium-term budgeting. Solutions must be found to loosen the system bottlenecks -- in human resources and other areas -- that make it difficult to translate more money into better health outcomes. One promising approach is Marginal Budgeting for Bottlenecks, based on work in a number of west African countries. As ministries of health develop their medium-term expenditure plans, system bottlenecks need to be clearly identified and strategies for unblocking them costed. The approach has produced encouraging results in Mali and Mauritania and is now set to be implemented in several Indian states (50).