The document discusses health care financing. It begins by outlining the objectives of describing national health accounts, the three functions of health care financing, and sources of financing. It then explains national health accounts and their use in tracking health expenditure trends. The three main functions of health care financing are described as resource mobilization, risk pooling, and resource allocation. Various sources of resource mobilization are outlined like general tax revenue, insurance schemes, and out-of-pocket payments. Criteria for assessing financial mechanisms and strategies for health sector reform like user fee systems and improving resource allocation are also summarized.

1. Unit-Four
Health care financing
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2. objectives
• Mention the benefits of national health
accounts
• Identify the three functions of Health care
financing
• Describe the various sources of financing
for the health sector
• Differentiate among the major health care
providers payment methods.
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3. National health accounts(NHA)
• A framework for measuring total-public &
private- national health expenditures
• Reveal trends in health expenditure over
time
• Used to make financial projections
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4. NHA address six basic sets of
questions
1. Where do the resources come from?
2. Where do the resources go ?
3. What kinds of services & goods do they
purchase?
4. Who provides what services?
5. What inputs are used for providing
services?
6.Whom do they benefit?
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5. NHA-----
NHA can track health expenditure trends, an
essential element in health care
monitoring & evaluation
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6. Functions of health care financing
I. Resource mobilization
II. Risk-pooling
III. Resource allocation (provision)
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7. I. Resource mobilization
 It looks at mechanisms for collecting money to
be spent on health.
1. General revenue-
2. Insurance Schemes
3. Community financing
4.Out-OF-Pocket (OOP) Payments & user fee
5. External sources of financing
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8. Resource mobilization--
1. General revenue-
• Government collects many kinds of taxes.
• Taxes are not earmarked for any one sector
•General tax financing offers a high degree of
political accountability in democratic political
systems
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9. Resource mobilization--
2. Insurance Schemes
a. Social insurance- are initiated by the
government & are mandatory
-Premiums & benefits are determined by
law or regulation
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10. Resource mobilization----
b. Private insurance: usually voluntary
•Private insurance markets have a number of
problems
 Adverse selection-sellers have information
but buyers have no information about the
market
 Risk selection (or cream-skimming)-
Patients know their risk insurance
companies may not
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11. Resource mobilization----
Moral hazard
• Increase their exposure to risk when insured
because the payment is bear on the insurance
company
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12. Resource mobilization--
3. Community financing
 Active involvement of the community in
revenue collection, pooling, resource
allocation &, frequently service provision.
4.Out-OF-Pocket (OOP) payments
payments are made by patients directly to
health service providers that are not
reimbursable by an insurance scheme
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13. Resource mobilization--
5. User fees-
Subcomponent of OOPs & refer to
payments when these are made for
services provided by the public sector
6. External sources of financing
Payments pay by Foreign aid or development
loans
.
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14. II. Risk pooling
 Risk-pooling refers to the collection
and management of financial
resources in a way that spreads
financial risks from an individual to
all pool members (WHO, 2000)
 Financial risk-pooling is the core
function of health insurance
mechanisms. It is essential to
ensure financial protection
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15. III. Resource allocation (payment,
provision)
Resource allocation concerns itself with
allocating the mobilized(pooled)
resources to service providers.
 R e s o u r c e p ayment methods
-Fee-For-Service
-Salary (and Bonuses)
-Capitation,
-Per-Diem;
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16. Resource allocation (payment,
provision)
Capitation- With capitation doctors for
each person that is registered as their
patient, whether they come for visits or
not
- A payment is fixed for all services that a
patient may use a period of time
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17. Criteria for assessing financial mechanisms
• Adequacy of mobilized resources
• Efficiency
• Freedom & flexibility in the use of resources
• Equity
• Effect on the Economy
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18. Crises of the Eighties
1. Increase in demand in developing countries
as more people have sought help
2. Demographic - growth of the population,
mainly due to greater child survival
3. labor intensiveness of the provision of
services
4. Increased hospitals with expensive
technologies
5. New pathologies, such as C o v i d - 1 9
, AIDS, which have brought about growing
health cost
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19. Crises of the Eighties--
6. Developing health care systems cannot
collect as high a proportion of their gross
domestic product in taxes
7. The majority of population work in the
informal sector
8. Taxes on exported primary products will
normally fall not on foreigners but on
internal producers
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20. Objectives of Health Sector Reform
1. To generate resources for the health sector
2. To foster equity in health care delivery
3. To improve efficiency of a services
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21. Health sector reform Strategies
1. User Fee Systems
2. Improving Budgeting and resources
allocation
3. Health Insurance Schemes
4. Enhancing the Role of the Private Sector
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22. User fee systems
1. Cost sharing- patient ‘shares” in the
financing of health services usually
nominal participation
2. Cost recovery- fees collected are used to
cover a substantial proportion of the cost
of providing care
3. Revolving drug funds-fees collected are
used to cover costs of medicines
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23. Advantages of user fee systems
1. Utilization of services linked to price, so
more efficient use of services
2. Population generally willing to pay for
quality health services
3. Can cover some of the costs of providing
care
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24. Disadvantages of user fee systems
1. May affect utilization of services particularly
for poorer population
2. Exemption systems difficult to implement
3. Fees collected may not cover entire cost of
care
4. Incentives to over-prescribe in order to
generate revenues
5. Requires good financial management
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25. Mechanisms for Improving User
Fee Systems
1. Revenue retention
2. Improvement in managerial capacity
3. Revision of fee schedules
4. Revision of the exemption system
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26. Efficient Use of Resources
• These include:
1.Reorienting Ministries
2. Hospital Autonomy
3. Contracting Out of Services
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27. Hospital Autonomy
Refers to various levels and types freedom and
independence a unit has regarding
 Planning
 Budgeting
 Production
 Financing
 Delivery of services
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28. Thank you!!
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