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Health Care Finance

Health Care Fin...
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Create by Adam Carson | November 20, 2017

There are generally five primary methods of funding health care systems:[23]

•general taxation to the state, county or municipality
•social health insurance
•voluntary or private health insurance
•out-of-pocket payments
•donations to health charities

In most countries, the financing of health care services features a mix of all five models, but the exact distribution varies across countries and over time within countries.[citation needed] In all countries and jurisdictions, there are many topics in the politics and evidence that can influence the decision of a government, private sector business or other group to adopt a specific health policy regarding the financing structure.

For example, social health insurance is where a nation's entire population is eligible for health care coverage, and this coverage and the services provided are regulated. In almost every jurisdiction with a government-funded health care system, a parallel private, and usually for-profit, system is allowed to operate.[citation needed] This is sometimes referred to as two-tier health care or universal health care.

For example, in Poland, the costs of health services borne by the National Health Fund (financed by all citizens that pay health insurance contributions) in 2012 amounted to 60.8 billion PLN (approximately 20 billion USD). The right to health services in Poland is granted to 99.9% of the population (also registered unemployed persons and their spouses).

Most countries' systems feature a mix of all five models. One study [10] based on data from the OECD concluded that all types of health care finance "are compatible with" an efficient health system. The study also found no relationship between financing and cost control.

The term health insurance is generally used to describe a form of insurance that pays for medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a social insurance program, or from private insurance companies. It may be obtained on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case premiums or taxes protect the insured from high or unexpected health care expenses.

By estimating the overall cost of health care expenses, a routine finance structure (such as a monthly premium or annual tax) can be developed, ensuring that money is available to pay for the health care benefits specified in the insurance agreement. The benefit is typically administered by a government agency, a non-profit health fund or a corporation operating seeking to make a profit.[11]

Many forms of commercial health insurance control their costs by restricting the benefits that are paid by through deductibles, co-payments, coinsurance, policy exclusions, and total coverage limits and will severely restrict or refuse coverage of pre-existing conditions. Many government schemes also have co-payment schemes but exclusions are rare because of political pressure. The larger insurance schemes may also negotiate fees with providers.

Many forms of social insurance schemes control their costs by using the bargaining power of their community they represent to control costs in the health care delivery system. For example, by negotiating drug prices directly with pharmaceutical companies negotiating standard fees with the medical profession, or reducing unnecessary health care costs. Social schemes sometimes feature contributions related to earnings as part of a scheme to deliver universal health care, which may or may not also involve the use of commercial and non-commercial insurers. Essentially the more wealthy pay proportionately more into the scheme to cover the needs of the relatively poor who therefore contribute proportionately less. There are usually caps on the contributions of the wealthy and minimum payments that must be made by the insured (often in the form of a minimum contribution, similar to a deductible in commercial insurance models).

In addition to these traditional health care financing methods, some lower income countries and development partners are also implementing non-traditional or innovative financing mechanisms for scaling up delivery and sustainability of health care,[12] such as micro-contributions, public-private partnerships, and market-based financial transaction taxes. For example, as of June 2011, UNITAID had collected more than one billion dollars from 29 member countries, including several from Africa, through an air ticket solidarity levy to expand access to care and treatment for HIV/AIDS, tuberculosis and malaria in 94 countries.[13]

Payment Models
In most countries, wage costs for healthcare practitioners are estimated to represent between 65% and 80% of renewable health system expenditures.[14][15] There are three ways to pay medical practitioners: fee for service, capitation, and salary. There has been growing interest in blending elements of these systems.[16]

Fee-for-service arrangements pay general practitioners (GPs) based on the service.[16] They are even more widely used for specialists working in ambulatory care.[16]

There are two ways to set fee levels:[16]
By individual practitioners.
Central negotiations (as in Japan, Germany, Canada and in France) or hybrid model (such as in Australia, France's sector 2, and New Zealand) where GPs can charge extra fees on top of standardized patient reimbursement rates.

In capitation payment systems, GPs are paid for each patient on their "list", usually with adjustments for factors such as age and gender.[16] According to OECD, "these systems are used in Italy (with some fees), in all four countries of the United Kingdom (with some fees and allowances for specific services), Austria (with fees for specific services), Denmark (one third of income with remainder fee for service), Ireland (since 1989), the Netherlands (fee-for-service for privately insured patients and public employees) and Sweden (from 1994). Capitation payments have become more frequent in "managed care" environments in the United States."[16]

According to OECD, "Capitation systems allow funders to control the overall level of primary health expenditures, and the allocation of funding among GPs is determined by patient registrations. However, under this approach, GPs may register too many patients and under-serve them, select the better risks and refer on patients who could have been treated by the GP directly. Freedom of consumer choice over doctors, coupled with the principle of "money following the patient" may moderate some of these risks. Aside from selection, these problems are likely to be less marked than under salary-type arrangements."[16]

Salary Arrangements
In several OECD countries, general practitioners (GPs) are employed on salaries for the government.[16] According to OECD, "Salary arrangements allow funders to control primary care costs directly; however, they may lead to under-provision of services (to ease workloads), excessive referrals to secondary providers and lack of attention to the preferences of patients."[16] There has been movement away from this system.[16]


1.^ Adamiak, E. Chojnacka, D. Walczak, Social security in Poland – cultural, historical and economical issues, Copernican Journal of Finance & Accounting, Vol 2, No 2, p. 23.

2.^White F (2015). "Primary health care and public health: foundations of universal health systems". Med Princ Pract. 24: 103–116. doi:10.1159/000370197.
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4.^ New Yorker magazine article: "Getting there from here." 26 January 2009
5.^ a b World Health Organization. (2000). World Health Report 2000 – Health systems: improving performance. Geneva, WHO
6.^ Remarks by Johns Hopkins University President William Brody: "Health Care '08: What's Promised/What's Possible?" 7 September 2007
7.^ Cook, R. I.; Render, M.; Woods, D. (2000). "Gaps in the continuity of care and progress on patient safety". BMJ. 320 (7237): 791–794. PMC 1117777 Freely accessible. PMID 10720370. doi:10.1136/bmj.320.7237.791.
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10.^ "Regional Overview of Social Health Insurance in South-East Asia, World Health Organization. And [1]. Retrieved 18 August 2006.
11.^ Glied, Sherry A. "Health Care Financing, Efficiency, and Equity." National Bureau of Economic Research, March 2008. Accessed 20 March 2008.
12.^ How Private Insurance Works: A Primer by Gary Claxton, Institution for Health Care Research and Policy, Georgetown University, on behalf of the Henry J. Kaiser Family Foundation
13.^ Bloom, G; et al. (2008). "Markets, Information Asymmetry And Health Care: Towards New Social Contracts". Social Science and Medicine. 66 (10): 2076–2087. PMID 18316147. doi:10.1016/j.socscimed.2008.01.034. Retrieved 26 May 2012.
14.^ UNITAID. Republic of Guinea Introduces Air Solidarity Levy to Fight AIDS, TB and Malaria. Geneva, 30 June 2011. Accessed 5 July 2011.
15.^ Saltman RB, Von Otter C. Implementing Planned Markets in Health Care: Balancing Social and Economic Responsibility. Buckingham: Open University Press 1995.
16.^ Kolehamainen-Aiken RL (1997). "Decentralization and human resources: implications and impact". Human Resources for Health Development. 2 (1): 1–14.
17.^ a b c d e f g h i j Elizabeth Docteur; Howard Oxley (2003). "Health-Care Systems: Lessons from the Reform Experience" (PDF). OECD.
18.^ Lucas, H (2008). "Information And Communications Technology For Future Health Systems In Developing Countries". Social Science and Medicine. 66 (10): 2122–2132. PMID 18343005. doi:10.1016/j.socscimed.2008.01.033. Retrieved 26 May 2012.
19.^ "European Union Public Health Information System – HIV/Aides page". Retrieved 6 August 2011.
20.^ "European Union Public Health Information System – Diabetes page". Retrieved 6 August 2011.
21.^ "European Union Public Health Information System – Smoking Behaviors page". Retrieved 6 August 2011.
22.^ "OECD.StatExtracts, Health, Non-Medical Determinants of Health, Body weight, Overweight or obese population, self-reported and measured, Total population" (Online Statistics). OECD's iLibrary. 2013. Retrieved 24 April 2014. External link in |website= (help)
23.^ Handler A, Issel M, Turnock B. A conceptual framework to measure performance of the public health system. American Journal of Public Health, 2001, 91(8): 1235–39.
24.^ Paina, Ligia; David Peters (5 August 2011). "Understanding pathways for scaling up health services through the lens of complex adaptive systems". Health Policy and Planning. 26 (5): 365–373. doi:10.1093/heapol/czr054. Retrieved 18 May 2012.
25.^ a b Peters, David; Sara Bennet (2012). "Better Guidance Is Welcome, but without Blinders". PLoS Med. 9 (3): e1001188. PMC 3308928 Freely accessible. PMID 22448148. doi:10.1371/journal.pmed.1001188. Retrieved 18 May 2012.
26.^ "OECD.StatExtracts, Health, Non-Medical Determinants of Health, Body weight, Obese population, self-reported and measured, Total population" (Online Statistics). OECD's iLibrary. 2013. Retrieved 24 April 2014. External link in |website= (help)
27.^ World Health Organization. Monitoring the building blocks of health systems: a handbook of indicators and their measurement strategies. Geneva, WHO Press, 2010.
28.^ Dal Poz MR et al. Handbook on monitoring and evaluation of human resources for health. Geneva, WHO Press, 2009
29.^ Hyder, A; et al. (2007). "Exploring health systems research and its influence on policy processes in low income countries". BMC Public Health. 7: 309. PMC 2213669 Freely accessible. PMID 17974000. doi:10.1186/1471-2458-7-309. Retrieved 26 May 2012.


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