FINANCING HEALTH CARE.

1
Introduction: Definition of health
care financing
.Health financing is the function of the
health system that deals with the
accumulation, mobilization and
allocation of money to cover health
needs of the people(16)(8). The
government of Tanzania spend about 10
percent of its budget each year to
finance the health sector(10).
.

 Health care costs have increased due to

increasing costs of drugs, technologies,
treatments, and population thus

 the government ON ITS OWN can no

longer afford to pay for what is required
for everybody.
Sources of Current Health Care
Financing Tz:
a) DONORS 44%

b) TAX BASED FINANCING (28%)

c) OUT OF POCKET (25%)

d) RISK POOLING MECHANISMS (3%)

Ctd…

 Due to decreasing development partner

support this, search for complementary
or alternatives IN health care financing is
necessary
.

 COMPLEMENTARY FINANCING OF
HEALTH CARE FROM USERS IS
THEREFORE THE PREFFERED
SOLUTION
IN cont..

WHY DO WE NEED COMPLEMENTARY HEALTH CARE

FINANCING?
 Insufficient funds for the health sector - the
share which is 11% of the total budget remains
far short of the target i.e 15% agreed in Abuja .

 there is inefficiency, mismanagement and

inequity in using public funds to support health
institutions.
THE MAIN COMPLEMENTARY HEALTHCARE
FINANCING MECHANISMS IN TANZANIA

 National Health Insurance Fund (NHIF)

 National Social Security Fund (SHIB)
 Community Health Funds (CHF)
 Micro-health Insurance Schemes (MHIS)
 User Charges
1.User fees-OOP

This is the oldest and most widespread method of

payment. If you are sick you go a health care
provider and pay the required fee.
 User fees were introduced in Tanzania at the
hospital level in 1993, as part of broader package of
reforms,

 they have subsequently been introduced at lower

level facilities (ie health centres and dispensaries) in
a number of councils.
User fees cont…

 Advantage
 It makes health-care providers concentrate
on what the community wants.
 Disadvantage
 Those who cannot pay will not get the
services.
User fees cont…

User fees has failed to accomplish health

financing in most of African countries due
to the following reasons;-
 The introduction of user fee has led to the fall
of utilization of health services, the fall has
relied on fees for drugs, registration, treatment
charges at outpatient facilities.
ctd
 Sustainable inequity that is local staff
being active in the process where money
is involved.
 Procedures for waivers were poorly
understood.
 Registration fee has caused decreased
in utilization by about 1/3 or more at all
levels being higher at the district level.
GENERAL TAX FUNDING

 Tax funding is a traditional and often the

main source of most countries health
systems financing
.

 The availability of adequate tax funding is

critical if problems in equitably accessing
health care are to be addressed. For example,
tax funded health budgets are critical in
promoting an equitable geographical allocation
of recurrent resources
.

 Tax funding can significantly reduce financial

access barriers, particularly through reducing
out-of-pocket payments
.

Constraints of tax funding:

 it is difficult to increase tax revenue in the
developing countries (in order to cover the
ongoing increase in health expenses) due to
the limited tax base
.

 The high level of external debt experienced in

many countries consume a considerable
share of government revenue

 Debt relief, and indeed debt cancellation (as

has begun to happen), should be advocated
for,
 To enable governments to devote more of
their limited tax funding to the provision of
health and other social services
.

 PREPAYMENT AS A SOURCE OF
HEALTH CARE FINANCING:
THE CASE OF NATIONAL HEALTH
INSURANCE FUNDS
National Health Insurance Fund (NHIF)

Description of the NHIF

 The (NHIF) was established in 1999 by a parliamentary
Act No. 8 of 1999.

 The scheme provides a wide range of benefits to her

members.

 Currently, the NHIF serves for the Public service

employees including their spouses and four children
and/or legal dependants, higher education students, men
in uniform etc

 It is a compulsory scheme for public servants

NHIF cont…

The aims of the national health insurance

fund are;-
 Tostrengthen cost-sharing by providing
an opportunity for beneficiaries to
contribute through their contributions to a
Fund.

 Toprovide free choice of providers to

beneficiaries who were formerly
restricted to government health facilities.
.

 To improve accessibility and quality of

health services by introducing competition
among health care providers from Public,
Faith-based, Non Government
Organizations and Private Health Providers.

 To reduce the financing gap by

supplementing the Government budgetary
allocation to the health sector by
contributions from formal sector employees.
.

 Toenhance health equity in the

provision of health care services.

 Toinstitute a permanent and reliable

system for the provision of health
services to its beneficiaries
 NHIF cont…
 Coverage:
 8%+ of the population.
 Contributions:
 The NHIF is financed through contributions
(employers contribute 3% and employees 3%) of
the basic salary of the employees, students
have special rates
 Identification of Members:
 Though identity cards.
.

 Benefit Package:
 Currently the benefit package includes:
Registration fees, Basic diagnostic tests,
Outpatient services including medications and
investigations,

 In-patient care (fixed rate per day per level of

health facility), Surgery, spectacles and other
services
 NHIF cont…

 Areas of exemptions of coverage:

 all public funded programs-TB,
 illegally/socially disapproved acts-USE OF
DRUGS

 Accreditation of Health Facilities:

 Hosp, H/C, Dispensaries and pharmacies
Success recorded by the NHIF
• Assurance of access to health services at all
times

• Contribution to the Health Sector Development

as a component in Health financing

• Attitude changes:
− From free services to contributions

− From cash payments to use of Cards

− From laisser-faire to ownership by Members

.
• Use of Cards have reduced bribery
tendencies

• Sustainable system outside the Government

general taxation system

• Brings services closer to members (Zones)

• Its setting has been a model to most
developing countries countries
Problems encountered by the
NHIF
 General perception at early days by health
care workers and benefi(mainly negative)-
health w

 Some stakeholders are yet to fulfill their

roles-poor reception of beneficiaries

 Drug and diagnostic equipment

shortages- poor quality of care
.

 Poor infrastructures- difficult to reach

care providing units

 Emergence of fraudulent tendencies

 Problems related to the health system

and infrastructure itself have negative
impacts on the funds’ operations
Challenges of the NHIF

 Limited scope of coverage

 Operates in un-regulated environment

 Low awareness by the public on how

these different schemes operates
.

 Preference on cash payments vs card

 Absence of set basic package (by

MoHSW)

 Non adherence by some health service

providers on the standards set by MoH
and the NHIF
.

 Fraud

 Fraud
 Fraud

Fraud
NHIF cont…

 General perception of government operation;-

there is a tendency to discard the NHIF based
on previous perceived insufficiency (eg
bureaucracy, delayed flow of funds) in
government related agencies, bad experience
and misperceiving NHIF as a government
structure.
.

 Accreditation criteria and procedure -

accredited procedure appear not to be well
known. The accreditation guidelines of NHIF
presently contain extensive checklists of
quality criteria( staff, equipment, laboratory
services), the criteria are however reflecting an
ideal situation with probably very few health
facilities in the country would comply with.
.

 Awareness;- inadequate knowledge on

the details of NHIF of private for profit
health care providers, have not yet been
targeted in the stepwise mobilization of
service provider to join the NHIF.
NHIF cont…

 People are very much concerned with time

limitation to the inpatient admission days
whereby NHIF pays only for no more than 3
days at health facility after that they require
referral to hospital otherwise do not pay for the
services provided further to the patient.
. SHIB

 SOCIAL HEALTH INSURANCE

BENEFITS SCHEME-SHIB
 This is provided by the NATIONAL
SOCIAL SECURITY FUND
ctd

 SHIB=SOCIAL HEALTH INSURANCE

BENEFITS
 Established so as to provide crucial
support to the Government’s efforts of
increasing access to health care services
to the poor majority in the country.
 SHIB is the 7th benefit to be implemented in the NSSF Act.
Section 41 of the NSSF Act No. 28 of 1997.
SHIB- The Benefit Package

 Aimed at providing most of general healthcare

services for beneficiaries

 Out-Patient Services
 Consultations
 Basic & Specialized investigations
 Drugs under the National Essential Drug
List
 Simple procedures (e.g. wound dressing)
 Referral to higher levels & special hospitals
 SHIB- The Benefit Package

 In-Patient Services
 Accommodation

 Consultation with a Medical Officer or specialist

 Basic investigations(e.g. blood slide for mps,

stool, etc)

 Specialized investigations
.

 Drugs under the National Essential Drug

List

 Minor and Major Operations

 Blood transfusion
.

 Specialized procedures

 Medicines on discharge

 Referral to higher level & specialized

hospitals
SHIB-Coverage and Eligibility

• the Scheme covers a member and dependants

(one spouse and up to four children);

• three months of healthcare services after

stoppage of contributions due to termination,
falling in arrears of contribution and retirement;
ctd
• qualifying members must have contributed for at
least three months immediately before accessing
the services; and

•pensioners willing to contribute 6% of their monthly

pension shall continue enjoying healthcare benefits.
NB: NSSF is considering inclusion of other persons
who are not statutory members of the Scheme
SHIB-Method of Payment

 Payment of providers is by Capitation

method
 Reasons for Capitation
 Easy to administer;
 Builds a self-monitoring system and
accountability among the Stakeholders
 links members to a specific provider who is
responsible for providing healthcare and
record-keeping;
 provides a predictable cash flow.
Advantages of SHIB

 Relief to the employers

 Relief to the members
 Contribution to the Government
towards better healthcare services
in the country, to become the 2nd
largest healthcare provider after the
Government
S SHIB-Exclusions

• Diseases under special preventive programs and

Public Health Care Services e.g.TB and Leprosy,
Cancers, HIV/AIDS, Epidemics, Maternal and
Child Health (MCH), Mental Illness, Sexually
Transmitted Diseases (STDs), & Any other
disease that will be categorized in this domain.
 Self-inflicted diseases or injuries e.g. drug abuse,
tobacco, alcohol, attempted suicide, and criminal
abortion
 Luxuries like Cosmetic treatments with no medical
indications e.g. plastic surgery
SHIB-Limitations

 Outpatient - not more than 4 times/year

 Inpatient (48 hours) - not more than 2
times/year

 Hospitalisation – a maximum of 42 days

of inpatient care per beneficiary per year
.

 THE COMMUNITY HEALTH FUND

(CHF)
Community Health Funds
…Background
• It is part of the health financing reforms
that begun in 1990.
• Health care financing study undertaken
between 1990-1992 recommended
introduction of cost sharing and National
Health Insurance.
• Community Health Fund was conceived
later to mitigate the shortfall of National
Health Insurance coverage.
Community Health Funds
…Background
 A decentralized voluntary health
Insurance scheme operating at district
level
 A government initiative to target people
from the formal and informal sector as
well as the poor.
 A way of trying to cover basic health care
services and to give access to those
excluded by other schemes.
Community Health Funds
(CHF)…Background
• Started on pilot basis in one district Igunga.
• The pilot was then extended to nine more
districts after evaluation.
• Policy decision has now been reached to
cover all districts now 137 districts are
covered.
• It is taken as one of the conditions to extend
cost sharing in primary health care facilities.
.ctd

• Since the premiums are in the form of

capitation, providers and contributors
have the liberty to spend in preventive
and promotive health services.
• Contributors have a choice of providers.
• Provides opportunity for providers to
increase efficiency
Community Health Funds…
The Concept

• Risk pooling among families in the

• informal sector.
• Households pay once a predetermined
premium for the medication of the whole family
per year.
• Payment is often made at the time of
harvesting or when the season of income has
arrived.
Community Health Funds (CHF)

 Why community financing?

 Improves efficiency and equity

 Allows sharing of risk (community-

rating)
 Allows collection of resources

 Facilitates community participation

(contribution to the general welfare of
the community)
Impact of community-based
schemes

• Increase access
 Generate resources
 Improve equity
 Improved Access for members of Schemes
 Increased utilization of the members as
compared to non-members
 Reduced out-of-pocket payment for
members as compared to non-members
CHF PROBLEMS…

 District managers have a direct influence

on the factors explaining low enrolment.
 Inability of people to pay membership
fees.
 Low quality of services provided at the
district level compared to suburban
areas.
 Lack of trust in scheme managers by the
people of concerned district.
 Failure to see the rationale to ensure.
Micro-health Insurance Schemes
(MHIS)

• Are voluntary schemes set up and run

by co-operatives, churches or local
communities
 They provide access to basic health
care services at a single provider taken
under contract
 Cater for small sections of the
population
 Are managed locally
MHIS (2)
 Most are registered under societies Act, and
Trustees Deed.
 Covers the informal sector or groups of common
interest

 Benefit package and contributions are set and

agreed by the respective members

 UMASITA and VIBINDO - successful cases of

Mutual Health Insurance
MHIS (3)

 The number of MHI are on increase from

Churches and charitable organisations
 Based on Mutual and common interest, Most
of these schemes covers the poor in the
informal sector
 MHIS are subject to many organisational and
managerial weaknesses due to their self-
managing character (limited skills and
capacities of those running the schemes).
NGOs IN HEALTH CARE FINANCING

 These subsidizes specific health

programmes
 Usually operate at local levels
 Have their own sources of funds
 Usually have preference in the types
of programmes or the health services
they offer or conduct.
Donor Funding
 Are funds donated in kindness
 Are usually for specifically designed health
projects/programmes
 Have a variety of contributions I.e both
monetary and technical assistance
 Provides about the same proportion of
funds for health as the Government
Donor funding cont…
 Constraints of donor funding
 Donor funding could potentially undermine the role of
the Ministry of Health in crucial areas of health policy,
particularly in relation to health care financing. That
the ministry of health would be more responsive to
donor demands, and it is possible that donors could
attempt to impose their health sector priorities than our
priorities.
 There are also concerns about the unreliability of this
particular source of financing and a growing
awareness of the need to find sustainable domestic
financing alternatives.
Basket Funding

 Health sector partners pool their funds

contributed for health
 Funds come from several stakeholders
in health i.e the Government, Local
Government, NGOs and other
development partners
Private Financing

 Comprise of Direct individual (out-of pocket)

payments as well as private health insurance
schemes

 To-date Tanzanian households provide the

greatest proportion of health care financing
.
 Out-of-pocket payments are gradually
becoming less popular in urban centres,
as people are now enrolling in Insurance
schemes.
 i.e. moving from cash payments to card
payments (at the point of receiving
health service)
 Cash payments are tricky modes
especially
for the poor
 Private Health Insurance

 Private health Insurance schemes are relatively

recent modes of health care financing in Tz

 These are such as AAR, MEDEX and Strategis.

 Are Voluntary and cover mostly salaried workers

on an individual basis or as employees of a
registered employer.

 Benefit package is rated i.e each member has a

specific benefit package depending on the
premium he/she paid.
.

PRIVATE HEALTH INSURANCE

ARRANGEMENTS
.
 In Tz PHI schemes mostly operate in
urban areas and with private health
providers.
 Examples: AAR,STRATEGIES,MEDEX

 Operates on an individual equivalency

(no pooling of risks).

 There is adverse selection of risk (what

problem u have)
.
 Premiums are calculated according to
the anticipated risk e.g.
age,
sex,
risk exposure-medical
family history,
medical individual history etc
.CTD
 It WILL lead to a two tier health system
because this insurance coverage is not
universal

 will result in one system for higher income

groups enabling them to purchase a high
quality of comprehensive health services

 and another system for a minimalistic package

of services for lower income groups.
A two tiered system reduces
 potential for cross subsidies, particularly between
relatively wealthy and poorer groups.

KEY CHALLENGES
 COMPROMISES EQUITY
 COMPROMISES ACCESS
 COMPROMISES QUALITY
 MEDICALISES HEALTH