HEALTH FINANCING

Dr. Jamelah R. Usman-Pasagi

HEALTH FINANCING

Health financing is concerned with how financial

resources are generated, allocated and used in
health systems.

Health financing policy focuses on how to move

closer to universal coverage with issues related to:
i.

how and from where to raise sufficient funds for

health;

ii.

how to overcome financial barriers that exclude

many poor from accessing health services; or

iii.

how to provide an equitable and efficient mix of

health services

REVENUE
REVENUE
GENERATION
GENERATION

RISK
RISK POOLING
POOLING

PURCHASING
PURCHASING

FUNCTIONS

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WHAT IS
CATASTROPHIC
HEALTH SPENDING?

It is defined as
spending more than
40% of the
household income
after basic
subsistence needs
have been met.

GENERAL MODELS OF HEALTH

SYSTEM FINANCING

TAX
TAX BASED
BASED
FUNDED
FUNDED

[ The UK National Health

Service (NHS)/ The
Cuban Model]

SOCIAL
SOCIAL
HEALTH
HEALTH
INSURANCE
INSURANCE
FUNDED
FUNDED
[ The German
Bismarckian Model]

Pools the risk, at most ,

only at the household
OUT
OUT OF
OF
level and provides the
POCKET
POCKET
least financial protection
SYSTEM
against catastrophic
SYSTEM
health expenditure and
impoverishment, aside
[ The US Model]
form excluding those who
have subsistence earning

GOVERNMEN
GOVERNMEN
TT
SUBSIDIZED
SUBSIDIZED
NATIONAL
NATIONAL
HEALTH
HEALTH
INSURANCE
INSURANCE
[ The Canadian Model]

Pooled together
and provide
protection against
catastrophic
health
expenditures and
impoverishment.

THE ISSUES

Divergent health
financing philosophy
among the major
health stakeholders
and government
administrations.

The chronic
underfunding of the
health system

Inequitable sourcing
of funding for health

Efficiency issues

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HEALTH FINANCING
PHILOSOPHY
Basic to Universal Health Care is the premise that

health is both a human right and a constitutional

right.
As a right, health and universal access to health

care become primarily the governments

responsibility.
Health as a right means that ALL Filipinos have

the right to health care first as human beings and

second as citizens and not because of Philhealths
capacity or incapacity to enroll them.

HEALTH FINANCING
PHILOSOPHY
A well-regulated private sector can, and should be

encouraged to contribute to the attainment of

Universal Health Care.
Health and health care services should not be

viewed merely as a cost; rather they should be

seen as a necessary investment.
The goal of Universal Health Care is to abolish

disparities in health status among population

groups, among income groups, among regions
within the country.

WHAT IS UNIVERSAL HEALTH

CARE?
Universal coverage (UC),
health coverage (UHC)

or

universal

-is defined as ensuring that all people can use the

promotive, preventive, curative, rehabilitative and
palliative health services they need, of sufficient
quality to be effective, while also ensuring that the
use of these services does not expose the user to
financial hardship

OBJECTIVES OF
UHC
equity in access to health

services - those who need

the services should get
them, not only those who
can pay for them;
that the quality of health

services is good enough to

improve the health of those
receiving services; and
financial-risk protection -

ensuring that the cost of

using care does not put
people at risk of financial
hardship.

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PATH TO UNIVERSAL
COVERAGE
UNIVERSAL
UNIVERSAL
COVERAGE
COVERAGE

ABSENCE
ABSENCE OF
OF
FINANCIAL
FINANCIAL
PROTECTION
PROTECTION
Health expenditure
dominated by outof-pocket spending

INTERMEDIAT
INTERMEDIAT
EE STAGES
STAGES OF
OF
COVERAGE
COVERAGE
Mixes of
community
cooperative- and
enterprise-based
health insurance,
social health
insurance-type
coverage for
specific groups

Tax-based
financing
Social health
insurance
Mix of tax-based
and social health
insurance

PATH TO UNIVERSAL
COVERAGE

TAX-BASED vs. SOCIAL HEALTH INSURANCE

REVENUE GENERATION FOR FINANCING UHC

UHC thru taxes

ADVANTAGEs:
Burden of contribution
is more progressive

Incurs less
administrative costs

Coverage is by virtue
of citizenship or
residence

UHC thru Social

Health Insurance
(SHI)

DISADVANTAGEs

1. Higher administrative

costs
2. Coverage is dependent on

identification, enrollment
and collection of
premiums.
3. SHI premium contributions

are less progressive than

income tax payments

TAX-BASED vs. SOCIAL HEALTH INSURANCE

REVENUE GENERATION FOR FINANCING UHC

UHC thru taxes

DISADVANTAGEs:

1. Tax revenues generally

go to the general
appropriations and the
government health
agency has to compete
with the other
government agencies for
the appropriate
budgetary allocation for
health.

UHC thru Social

Health Insurance
(SHI)
ADVANTAGEs

1. Funds raised

through SHI are

earmarked for
health
2. The SHI funds

represent additional
revenues for health

UNDERFUNDING and SOURCE

OF FUNDING
Evidence within Asia Pacific Region (37 countries

of the WHO Western Pacific Region and 11

countries of the WHO South-East Asia Region)
suggests that countries whose governments
spend less than 5% of GDP on health had
higher
percentage
of
households
with
catastrophic health expenditures.
FIG1

UNDERFUNDING and SOURCE

OF FUNDING
APPP1

UNDERFUNDING and SOURCE

OF FUNDING
Regional data also suggests that countries with

greater than 30% OOP health expenditures

had higher percentage of households with
catastrophic
expenditures
and
consequent
impoverishment.
The major source of health care financing in most

countries of the region was out-of-pocket (OOP)

payments.

UNDERFUNDING and SOURCE

OF FUNDING
App2

UNDERFUNDING: THE SOLUTION

Health revenues can be increased in the region by:
1. increasing domestic tax revenues,
2. expanding the tax base,
3. developing social health insurance,
4. borrowing externally, or
5. seeking debt repayment relief.

ALLOCATIVE
EFFICIENCY

PAYMENT
MECHANISM

FRAGMENTATION
AND OVERLAP OF
THE DIFFERENT
FINANCING
INSTITUTIONS

EFFICIENCY ISSUES

EFFICIENCY ISSUES
ALLOCATIVE EFFICIENCY: spending the limited

health resources on expensive tertiary health care

versus the more cost effective primary and
preventive health care.
PAYMENT MECHANISMS: the dominance of the

inefficient fee-for-service payment mechanism

FRAGMENTATION AND OVERLAP OF THE

DIFFERENT FINANCING INSTITUTIONS with

Philhealth seemingly acting independently of the
DOH

ALLOCATIVE EFFICIENCY
FIG 2

PAYMENT MECHANISM
COMMON
METHODS
1. Fee-for-service
2. Salaries
3. Case Payments
4. Capitation
5. Global Budgets

MAIN PROVIDER
IN ASIA PACIFIC
REGION
1. Budget Allocations
2. Salaries
3. Fee-for-service

FEE-FOR-SERVICE
-a payment mechanism where the
provider is paid for every service
provided, usually at the time of
service.

FRAGMENTED HEALTH FINANCING SYSTEM

AND OVERLAPPING OF FINANCING AGENT
Government

health spending is
among hundreds of stakeholders:
1. DOH
2. LGUs
3. Philhealth,

fragmented

Each with different health financing philosophies,

mandates and responsibilities.

FRAGMENTED HEALTH FINANCING SYSTEM

AND OVERLAPPING OF FINANCING AGENT

The DOH finances retained hospitals and national

health programs.

The LGU (with 81 provinces, 136 cities and 1,495

municipalities) use their internal revenue allotments
to finance their health facilities and services.

The provinces finance the provincial and district hospital

hospitals.

Municipalities are in charge mainly of public health and

primary care.

PhilHealth pays for services of DOH, LGUs and private

health facilities.

-ENDTHANK YOU.