Health financing

Health financing and economics

Health financing is a core function of health systems that can enable progress towards UHC by improving effective service coverage and financial protection.

Health financing operates through three essential functions: revenue raising, risk pooling, and purchasing. Revenue collection refers to identifying and analyzing the sources of funds directed into the health system. Risk pooling involves distributing the financial burden of health care. Purchasing, which uses various payment mechanisms, plays a critical role in shaping how resources are allocated. Together, these functions provide valuable insights into the efficiency, equity, effectiveness, and sustainability of the health system, supporting progress towards UHC.

While health financing reforms are hugely context specific, the guiding principles that accelerates progress towards UHC includes:

• moving towards predominant reliance on public funding sources
• reducing fragmentation in how funds are pooled
• moving towards more strategic purchasing of health services, linking provider payments to performance, quality and equity
• aligning coverage policies (benefits and copayments) explicitly with policy objectives. 

Health economics 

 Value for money in health entails achieving the greatest possible health outcomes and equity gains from every unit of resource spent, ensuring efficiency, effectiveness and sustainability. This area of work in WHO covers technical and allocative efficiency: costing and budget impact, investment cases, health technology assessment, benefit package design and priority setting.