Health financing

The goal of health financing policy is to move towards universal health coverage (UHC) by ensuring adequate spending on health at national and local levels and effective allocation of financial resources to different types of public and personal health services. Putting in place proper health financing mechanisms can ensure that different population groups, especially the most vulnerable and high-risk groups, can access care and be protected from catastrophic expenditures and impoverishment due to health payments.

Health financing has three core functions – collection, pooling and purchasing. Analysing the sources of funding channelled to the health system (collection), risk-pooling to share the burden of health costs through cross-subsidization by pool funding according to members’ health risks or geographically distinct health funding pools. Using different types of payment mechanisms (purchasing) can provide insights into the health system's efficiency, effectiveness, equity, and sustainability in moving towards UHC.

Countries can progress towards universal health coverage when people are financially protected while accessing health services. This requires ensuring that the health system can respond adequately to countries’ health challenges and that there are health financing mechanisms and arrangements that actively enable these goals.  

Despite improvements in health service coverage in the Western Pacific Region over the past decade, the proportion of households suffering financial hardship when accessing health services in countries has increased. In 2017, on average, 1 in 5 people in the Region incurred catastrophic health spending due to out-of-pocket payments when seeking care. This means that while there is better access to health services, more and more people are dealing with unaffordable healthcare.  

However, implementing sustainable health financing policies, arrangements, and mechanisms can reduce the risk of catastrophic and impoverishing health spending, reversing the negative trend to ensure a better, equitable and sustainable future for all.  

In the Western Pacific Region, the Regional Committee Resolutions on universal health coverage in 2015 and primary health care in 2019 emphasize strategic capacities and actions for health financing to improve financial protection. These include: 

• financing health services using publicly funded, predictable, stable, and well-executed health budgets; 
• utilising fiscal measures such as health taxes that create healthy behaviours;  
• pooling funding across the health system to redistribute funds and delink them from patients’ ability to pay;  
• coordinating and integrating health system and financing functions;  
• having evidence-informed, performance-based, and sustainable budget allocation and hospital and healthcare provider payment mechanisms that support healthcare service delivery;  
• implementing systematic and transparent mechanisms and institutions to develop and update the set of priority services provided to the population; and 
• ensuring that the people understand the defined entitlements and obligations. 

WHO supports Member States in strengthening health financing functions and initiatives in the context of their health systems, institutions, mechanisms, and policies to enable progress towards universal health coverage. WHO works closely with governments and technical partners to support health financing policy development and implementation through evidence generation, capacity building, knowledge sharing and advocacy.