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Healthcare financing
- 1. HEALTHCARE FINANCING How Healthcare is Financed
- 2. 1)TAX-BASED SYSTEMS • Tax-based systems is a form of risk pooling in which the risk pool is the entire population of taxpayers. • It requires a competent government that are capable of collecting, managing and dispersing funds in a responsible and accountable manner.
- 3. Cont… • Tax-based financing systems subsidize the poor and disadvantaged: wealth is transferred from the rich and healthy to finance healthcare for the poor and sick. However, the problem of consumer moral hazard (overuse of services that are “free”) remains, and this has been one of the reasons why elements of “fee-for-service” have been introduced in many of tax based systems.
- 4. 2)PAY AS YOU USE :USER-FEES • Also known as ‘User-charges’. • This is the normal way that we pay for most goods and services, and represents a market- based solution for healthcare financing.
- 5. Cont… • User Charges have a disproportionate effect on the utilization of services by the poor, thus raising equity concerns. • In resource poor environments user-fees can be a significant barrier to accessing care and removal of fees can increase utilization of services.
- 6. 3) RISK BASED (PRIVATE) INSURANCE • Entitlement to healthcare is guaranteed via making contributions (insurance premiums) that are related to the risk of such an event. • It redistributes from the well to the sick, and from the lucky to the unlucky.
- 7. Cont… • As costs rise, insurance premiums rise, and the very poor and sick drop out of the system. • Such systems do little to improve the access to healthcare for the poor, the elderly, and people with chronic illness.
- 8. 4) SOCIAL HEALTH INSURANCE • Social health insurance (SHI) systems raise funds via broad based, often compulsory insurance. No one is excluded from such schemes, in contrast with private risk-based systems.
- 9. 5. Donor Funding • External donor funding is a significant source of healthcare funds throughout the developing world. Many of the least developed countries are heavily reliant on donor funding.
- 10. Cont… • Donor funding is normally dispersed via government-run health financing systems), however it can also be given to non- governmental, and other private organisations.