Health Financing Strategies
Universal Health Coverage
Universal Health Coverage:
Health System Financing in India.
Health Financing Strategies:
Where we are? Status of Heath Financing Globally
More Money For Health: How to generate more
More Health to Money: How to Utilize the resources and
Health financing strategies in India
As proposed by the HLEG on UHC
As proposed in Proposed Draft 12th Plan
Existing Health Insurance schemes in India
Critical Review of Existing Schemes Proposed plan in
Thailand: Thunyalak Boonsumlit
China: Story of Dou Huhai
Universal Health Coverage:
“Ensuring that all people have access to needed Promotive, preventive,
curative and rehabilitative health services, of sufficient quality to be
effective, while also ensuring that the use of these services does not
expose the user to financial hardship”.
World Health Organization
“Ensuring equitable access for all Indian citizens, resident in any part
of the country, regardless of income level, social status, gender, caste
or religion, to affordable, accountable, appropriate health services of
assured quality ( Promotive, preventive, curative and rehabilitative) as
well as public health services addressing the wider determinants of
health delivered to individuals and populations, with the government
being the guarantor and enabler, although not necessarily the only
provider, of health and related services”.
HLEG on UHC, Planning Commission
1883 Health Insurance Bill, Germany became the first country to
make nationwide health insurance mandatory.
In U. K. Enactment of the National Insurance Act in 1911 and the
National Health Service (NHS) in 1948.
Article 25.1 of the 1948 Universal Declaration of Human Rights
states right to health as an important fundamental right.
1966, The International Convention on Economic, Social and
Cultural Rights recognized "the right of everyone to the
enjoyment of the highest attainable standard of physical and
1978: Alma-Ata declaration & the vision of "health for all”
World Health Assembly resolution 58.33 adopted 'Universal
Health Coverage' in 2005,
Health System Financing in India:
• State Subject
• Predominantly catered by Private Sector
• Private 78.05% vs. Public 19.05% vs. 2.28% External flow.
Table 1: Health Expenditure in India (2004-05)
Type of Distribution of total Share of GDP (%)
Expenditure health Expenditure
Public Expenditure 19.67 0.84
Private 78.05 3.32
External Flow 2.28 0.10
Total Expenditure 100 4.25
Source: National Health Account 2004 – 05, MOHFW, GOI
Source: National Health Account 2004 – 05, MOHFW, GOI
Distribution of Public & Private Spending in States
Health Expenditure in India: International
Private Insurance Coverage: India
Why Universal Coverage?
Promoting and protecting health is essential to human welfare and
sustained economic and social development.
30 years: the Alma-Ata Declaration
Many ways to promote and sustain health : Education, housing, food and
Timely access to health services – a mix of promotion, prevention,
treatment and rehabilitation – is also very critical
Well-functioning health financing system – essential.
It determines use of health services when people need them. It determines
if the services exist.
Three Dimensions of Universal Health Coverage:
A theory of change due to health insurance
Source: Impact of national health insurance for the poor and the informal sector
in low- and middle-income countries: Systematic Review
Three fundamental questions ?
1. How is such a health system to be financed?
2. How can they protect people from the financial consequences
of ill-health and paying for health services?
3. How can they encourage the optimum use of available
- Also Equity and Monitoring and Evaluation.
Where we are?
Where we are? …..
Where we are? …..
High proportion of the world’s 1.3 billion poor no access to health
services simply because they cannot afford to pay at the time they
Even if covered with insurance: Uncovered Cost is burden.
Raising adequate funds from a sufficiently large pool of individuals,
Supplemented with donor support and general government revenues,
Spending these funds on the services a population needs.
Countries are at different points on the path to universal coverage and
at different stages of developing financing systems
Financing for Universal Health Coverage:
Specifically designed Financing systems to:
Provide all people access needed health services.
Ensure, use of these services does not expose the user to
What are the problems?
3 Fundamental Problems:
Availability of Resources.
Over reliance on direct payments.
In Efficient and Inequitable distribution of resources
Three critical areas of health financing:
Raise sufficient money for health;
Remove financial barriers to access and reduce financial risks of illness;
Make better use of the available resources.
What a health financing system does?
General or specific taxation, Compulsory or Voluntary health insurance
contributions & Direct out-of-pocket (User Fee or Donations)
Accumulation and management of financial resources. an element of pooling
funded by prepayment, combined with direct payments (Cost Sharing)
The process of paying for health services.
Three main ways to do this. (Either single of combinations)
O First, the government to provide budgets directly to its own
health service providers (integration of purchasing and
provision) using general government revenues and, sometimes,
O Second, An institutionally separate purchasing agency (e.g. a
health insurance fund or government authority) to purchase
services on behalf of a population (a purchaser-provider split).
O Third, Individuals to pay a provider directly.
On the path to universal coverage: Country
In April 2009: safe, effective, convenient and affordable”
health services to all urban and rural residents by 2020.
The New Cooperative Medical Schemes, initiated in
The recent health financing reforms extend insurance coverage to
projected 32 million previously uninsured people by 2019.
The health financing decision process:
More Money for Health:
No magic bullet to achieve Universal Health Coverage.
New medicines and diagnostic and curative technologies become
available much faster than new financial resources.
Raise more Funds for Health:
Broadly, three ways to raise additional funds or diversify sources of
Higher priority in existing spending, particularly in government’s
Find new or diversified sources of domestic funding; and / or
To increase external financial support.
Ensuring a fair share of total government spending
Table: Government expenditure on health as a percentage of total
government expenditures by WHO region, 2000–2007a
Table: The share of total government expenditure allocated to
health in the WHO European Region, 2007
Diversifying Domestic Sources of Revenue:
Two main ways:
1. To allocate more of the existing financial resources to health,
2. To find new methods to raise funds or to diversify the
Indonesia: Increases tax revenues by encouraging compliance
Ghana: 70–75% of f its National Health Insurance Scheme with
general tax funding, 2.5% national health insurance levy on VAT.
Germany: Gesundheitsfond: New fund to inject more money in SHI
from General taxation.
France: Contribution sociale généralisée, Special fund for NHI
form tax on real estates and other traditional.
Diversifying Domestic Sources of Revenue:
Options Fund Raising Examples
Special levy on $$–$$$ Australia has recently imposed a
large and levy on mining companies;
profitable Pakistan has a long-standing tax on
companies pharmaceutical companies
Levy on currency $$–$$$ Some middle-income countries with
transactions important currency transaction
Diaspora bonds $$ Used in India, Israel and Sri Lanka,
although not necessarily for health
Financial $$ Initially in Brazil in the 1990s
transaction tax subsequently replaced by a tax on
capital flows to/from the country
Options Fund Examples
Mobile phone $$ Taking 1% of bill would raise a lot of
Voluntary solidarity money; relevant to low-, middle- and high-
contribution income countries
Tobacco excise tax $$ These excise taxes on tobacco and alcohol
Alcohol excise tax exist in most countries
Excise tax on $–$$ Romania: Proposing to implement a 20%
unhealthy food levy on foods high in fat, salt, additives
(sugar, salt) and sugar.
Selling franchised $ Selling franchised products or services from
products or services which a percentage of the profits goes to
Tourism tax $ Airport departure taxes are already
widely accepted; a component for health
could be added, or levies found
External financial assistance:
Direct Payment: Why is it so widespread?
Direct payments are the least equitable form of
Governmental not willing to spend more.
No capacity or will to generate POOL.
Taps into new areas.
Attractive option during Economic Recessions.
Out-of-pocket payments as a function of gross
domestic product (GDP) per capita, 2007
Source: National Health Accounts [online database]. Geneva, World Health Organization
The effect of out-of-pocket spending on financial catastrophe
Source: Xu K et al. Exploring the thresholds of health expenditure for
protection against financial risk.
Strength in numbers:
O Cost Sharing
Most effective way for financial risk of paying for health services is
to share it, and the more people who share, the better the
Three interrelated options:
O Replace direct payments with forms of prepayment, most
commonly a combination of taxes and insurance contributions.
O To consolidate existing pooled funds into larger pools, and
O To improve the efficiency with which funds are used.
O A total of 49 health-related community schemes operate in
Bangladesh, India and Nepal, with the Indian schemes
More health for the Money: Using resources
Pricewaterhouse Coopers’ Health Research Institute:
More than half of US$ 2 trillion-plus that the United
States of America spends on health each year is wasted
The European Health care Fraud and Corruption
Little less than 6%, lost to mistakes or corruption.
Ten Leading Causes of Inefficiency:
1. Medicines: underuse of generics and higher than necessary prices
2. Medicines: use of substandard and counterfeit medicines
3. Medicines: inappropriate and ineffective use.
4. Health-care products and services: Overuse or supply of
equipment, investigations and procedures
5. Health workers: Inappropriate or costly staff mix, unmotivated
6. Health-care services: Inappropriate hospital admissions and length
7. Health-care services: Inappropriate hospital size (low use of
8. Health-care services: Medical errors and suboptimal quality of care
9. Health system leakages: waste, corruption and fraud
10. Health interventions: Inefficient mix/ inappropriate level of
Table: Median price ratios of public-sector procurement prices
for generic medicines, by WHO region:
How can this in- efficiency be tackled?
WHO-CHOICE (Choosing Interventions that are Cost
Eliminate Unnecessary Spending on Medicine
Improve quality control of Medicine
Use Medicine appropriately
Get Most out of technologies and services
Improve hospital Efficiency – Size and Length of stay
Get care right the first time
Eliminate waste and corruption
Critically assess the service needed:
Tackling Inefficiency: Lebanon’s Example
1998: 12.4% of GDP on health, Highest in the Eastern
60% Out-of-pocket payments among the highest in the
Series of reforms implemented to improve equity and
O Revamping of the public-sector primary-care network;
O Improving quality in public hospitals; and
O Improving the rational use of medical technologies and
medicines Including use of quality-assured generic medicines
GDP on health from 12.4% to 8.4%. Out-of-pocket
spending as a share of total health spending from 60% to
O First concrete step:
During planning process of 12th Five Year Plan: widely
termed as Health Plan.
O Planning commission constituted a High level Expert Group on
Universal Health coverage 2010.
O Mandate: Developing a framework for providing easily
accessible and affordable health care to all Indians.
O HLEG also recommended Appropriate Health Care Financing as
key strategy to achieve Universal Health Coverage.
The new architecture for UHC: 6 Critical Areas:
1. Health Financing and Financial Protection
2. Health Service Norms
3. Human Resources for Health
4. Community Participation and Citizen Engagement
5. Access to Medicines, Vaccines and Technology
6. Management and Institutional Reforms
Current Scenario in India:
Low Priority to Public Health Spending.
Low Per Capita Expenditure on Health:
High Burden of Private Out of Pocket Expenditure.
Wide Variation in Public Health Expenditure across states.
Large share on State Government Expenditure (Nearly 2/3rd).
States with low public expenditure on health typically find
themselves fiscally constrained by two factors:
Centre’s Allotment of Revenue is not uniform.
Less scope for extra development allocation by the poorer
Many state governments do not accord high priority to health.
Financial protection against medical expenditures is far from
universal. Expenditure on social insurance 1.13% of total health
spending in 2004-05.
Vision for UHC:
Three core objectives need to be tackled:
Ensure an adequacy of financial resources for the provision of
universal access to essential health care.
Provide financial protection and health security against
impoverishment to the entire population of the country; and
Put in place financing mechanisms that is consistent in the long-run.
A predominant role for public financing;
Related to this, coverage is compulsory (where linked to
contribution) or automatic (where based on certain characteristics
such as residence or citizenship); and
Universal entitlement without exclusion.
Requires: Compulsion & Subsidization
Government Spending on Health: 2.5% of GDP by 2012 &
3% by 2022.
Ensure availability of free essential medicines.
Use general taxation as the principal source of health care
Do not levy sector-specific taxes for financing
Do not levy fees of any kind for use of health care services
Introduce specific purpose transfers to equalize the levels of
per capita public spending on health across different states.
Accept flexible and differential norms for allocating finances
Expenditures on primary health care account for at least
70% of all health care expenditures.
Do not use insurance companies or any other independent agents
to purchase health care services.
O Three Provisions can be considered:
O Direct provision
O Direct provision plus contracted-in services
O Purchase by an independent agency.
Purchases of all health care services under the UHC system directly
by the Central and state governments.
All government funded insurance schemes should, over time, be
integrated with the UHC system. National Health Entitlement Cards.
RSBY transferred to MOHFW and Used as technical base.
Finally, two determinants for the Success of UHC system:
Clear Cut guideline for contracting in and service provision.
A common IT enabled information, gathering, networking and
Health Insurance Schemes being implemented by GOI and
Scheme Coverage Features
Universal Health Mostly benefits(≤INR30 000) Only for families below
Insurance for admission to hospital for a the poverty line and
Scheme (launched family on a floater basis, for individuals younger
in 2003) including compensation (INR25 than 70 years;
000) for death of earning head Yearly rate of INR300
of the family; for an individual; INR450
compensation at the rate of for a family
INR50 per day for a maximum of five; INR600 for a
of 15 days to the earning head family of seven members
or spouse of the family; one with a government
maternity benefit with 1 year subsidy of
waiting period with INR2500 INR200, INR300, and
for normal and INR400, respectively
INR5000 for caesarean sections
Rashtriya Swasthya Cashless coverage of all health Only BPL Family
Bima Yojna services Up to five members for 1
(launched in 2008) Smart-card-based system; year;
Only hospital admission and day-care renewal yearly; registration
diseases; fee for a family is INR30;
total of INR30 000 insured per family Central government
below poverty line per year. contribution 75% & state
Pre-existing illnesses also covered; government 25% of the
Reasonable expenses for before and premium
after hospital admission for 1 day
before and 5 days after;
Transport allowance (actual with limit
of INR100 per visit) subject to a
yearly limit of INR1000
Yeshasvini Scheme in Covers risk of INR100 000 for one Member of Registered Rural
Karnataka surgery and INR200 000 for several Cooperative Society of
(launched in 2003) surgeries in a year with a Premium of Karnataka for a
INR120; minimum of 6 months;
Pre-existing diseases are All members of the family
covered; are eligible;
Cashless surgery at fixed tariff Upper age limit 75 years
Kudumbasre INR30 000 a year Families below the poverty line;
For a family of five; Beneficiary’s contribution is
e in Kerala Up to INR60 000 a year for treatment at INR33;
(launched home, if required; Premium
in 2006) Up to INR15 000 a for a typical family with five
year for maternity need; members below the poverty line
Subsistence allowance of INR50 a day if is INR399 a year;
bread a central government subsidy of
winner is hospitalized; coverage of all INR300 from the Universal
existing illnesses, and cashless Health Insurance
medical treatment; Scheme and an additional
An accident insurance benefit of INR100 subsidy of INR33 each from the
000 for death state government
or full disability and INR50 000 for and the local organization;
partial disability implemented through a
Arogyashree INR 200 000 insured per family; covers Families below the poverty line;
hospital admission for surgeries and beneficiaries identified
in Andhra treatment of diseases such as heart, through health camps; INR330
Pradesh cancer, neurosurgery, renal, burns, and per year per family are paid by
(launched in polytrauma cases the state government; Validity
2007) for 1 year or up to the time
when the overall claim ratio
reaches 120% of the premium