Health financing forUniversal Health Coverage:

Objectives and directions for reform

19 April 2016

Inke Mathauer MSc., PhDHealth Financing Policy, WHO, Geneva

I. UHC objectives and directions forhealth financing reform

II. Health financing arrangements for UHC

III. The political economy of UHC

IV. How can partners support progresstowards UHC

Acknowledgement: Sections I-II are based on a presentation byJoe Kutzin, coordinator of Health Financing Policy Unit, WHO

Overview

What is UHCWhat is UHC

Access tokey promotive, preventive, curative and rehabilitative health

services of good qualityfor all

at an affordable costwithout the risk of financial hardship linked to paying for care

I.

Implications of UHC => UHC goalsImplications of UHC => UHC goals

Equity in service use (reduce gap between need andutilization);

Improved quality; and

Financial protection

Progressive realization:– It is about moving towards Universal Health Coverage, i.e.

improvements on these goals– All countries have potential to improve

I.

“The path to UHC should be home-grown”“The path to UHC should be home-grown”

Even though broad UHC goals are shared by all…– specific manifestations of problems vary, so how the goals

should be operationalized will vary as well– every country already has a health financing system, so starting

point for each country is unique– mix of fiscal and other contextual factors also unique

But this should not be interpreted to mean that “anythinggoes”

– Some “do’s” and “don’ts” in health financing policy– Countries can avoid repeating mistakes made by others

I.

Objectives to orient health financing reformsObjectives to orient health financing reforms

Move towards predominant reliance on compulsory (i.e. public)funding sources

Increase the level of pooled (prepaid) funds and reducefragmentation (i.e. more prepayment)

– to enhance redistributional capacity– Three key characteristics for pools: Size (bigger is better), Diversity

(healthy-sick, rich-poor), Participation (compulsory or automatic)

Shift towards strategic purchasing to– Align funding and incentives with promised services,– Enhance efficiency and equity– Increase accountability

I.

Why is strategic purchasing so important?Why is strategic purchasing so important?

Because no country can just spend its way to UHC

spending wisely: link allocations to providers toinformation on their performance and the health needs ofthe population that they serve…

…while also managing expenditure growth and avoidingopen-ended payment (such as unmanaged fee for service)

Move away from the extremes (rigid line-item budgets,unmanaged fee for service)

Remember! RBF as one form of strategic purchasing

I.

Pooling

Purchasing

Revenue raising

Service provision

People

People

and alsothis:Reforms toimprove howthe healthfinancingsystemperforms

What health financing policy needs to addressWhat health financing policy needs to address

This

Priorities and tradeoffs withregard to population, service,and cost coverage

I.

Two necessary and sufficient conditions for UHCTwo necessary and sufficient conditions for UHC

Compulsion (refers to the source: public revenue; and tocoverage: automatic or mandatory affiliation)

– some who can afford it are unwilling to pay

Subsidization (use of government revenues needed)– some are too poor or too sick to be able to afford voluntary coverage

One condition without the other won’t work:– subsidies alone not sufficient because rich/healthy will not join; and

compulsion without subsidies imposes a heavy burden on the poorand sick

=> Enforcing such conditions requires a strong role for the statein health financing

II.

Click to edit Master title style1. Unsubsidized contributions by the non-poor informalsector or "community-based health insurance"

1. Unsubsidized contributions by the non-poor informalsector or "community-based health insurance"

• Voluntary health insurance, incl. CBHIWHY

• CBHI: small, fragmented pools, no cross-subsdization across pools, flatpayments are regressive, high administrative costs

• Voluntary payment => Adverse selection => unbalanced risk pools

• The poor cannot afford contributions and are often excluded

Limited financial protection, limited benefit package

Lack of compulsion and subsidization

No country has achieved significant population coverage rates throughvoluntary contributions from the informal sector

No country has effectively progressed towards UHC throughVOLUNTARY HEALTH INSURANCE

IV.What does not work to accelerate progress towards UHC:Unsubsidized contributions by the poor and people in the

informal sector

What does not work to accelerate progress towards UHC:Unsubsidized contributions by the poor and people in the

informal sector

II.

Many LMICs have established or explore this option:State budget transfers to health insurance type schemes

to subsidize participation

Many LMICs have established or explore this option:State budget transfers to health insurance type schemes

to subsidize participation● Explicit reliance on general budget transfers, but retaining

contributions

● In countries with payroll tax and contributory-based entitlement,general budget transfers play key role

=> No country gets to universal population coverage withoutsome budget transfers, because some people are alwaysunable or unwilling to contribute

● Share of budget transfers as of total revenues of this fiancingscheme: Japan: 25%; Hungary: over 50%; Gabon: 47%;Rwanda: over 50% (in 2011)

II.

Features of recent HF reforms in LMIC:Govt subsidization of HI type schemesFeatures of recent HF reforms in LMIC:Govt subsidization of HI type schemes

Expansion of population coverage to uninsured groups outsidethe formal sector

Collection of contributions or "surrogate" (govt subsidization inform of budget transfers on behalf of the non-contributors)

Affiliation (explicit enrolment) of individuals considered eligible

Provision of explicit entitlement to a benefit package

Often via a third party purchasing agency, i.e. Health InsuranceFund

– Distinct purchasing agency, purchaser-provider split

II.

Some political economy aspects of UHCSome political economy aspects of UHC

Health system reforms have an explicitly political agenda, because itinvolves redistribution.

"UHC" is attractive for electorates

UHC reforms can deliver nationwide results bringing political benefits

MoHs are often weak in cabinets and MoFs don’t usually want tospend more on health

Big UHC reforms require significant increases in public financing

Successful UHC reforms need full cooperation across government

Leadership/head of state power is needed to mobilise supporters,raise financing and tackle opposition from interest groups

This slide is adapted from a presentation by Rob Yates,Barcelona 2015

III.

How to engage in the "politics of UHC"?How to engage in the "politics of UHC"?

Different development partners and organisations can eachuse their proven ways of engaging and providing support:

Involve politicians from the outset in health planningprocesses

Help MoH sell the political benefits of UHC within cabinetand to the head of state

Tailor messages to different audiences

Involve Civil Society Organisations, trades unions, mediaetc.

Exchanges with parlamentarians on budgeting issues

This slide is adapted from a presentation by Rob Yates,Barcelona 2015

III.

What kind of support for countries?What kind of support for countries?

Strong technical assistance and coordination at countrylevel is important to accompany country-specific paths

– with adequate attention put on the health financing system’sarchitecture and system capacity strengthening.

This is particularly the case for the most affected countries(poorest, post-conflict, post-ebola, fragile, no fiscal space).

– These require extended, long-term technical and financialassistance to build foundations, with a priority focus on poolingand purchasing.

Strengthening platforms to link evidence and policy making

IV.

The example of theEU-Lux-WHO partnership programme

The example of theEU-Lux-WHO partnership programme

is in place since 2012: in its 3rd phase and meanwhile 27 countries;

Policy advisors placed in country offices to facilitate, orient, providetechnical advice – real country level engagement

They assist countries in developing and revising their home-grownhealth financing strategy that anticipates and addresses barriersprior to implementation, implementation challenges and alignmentissues both within the health system as well as beyond;

flexible approach to country-level planning is recognised as a majoradded value.

IV.

Thank you very much!

Questions? Comments!

Government spending & financial protectionGovernment spending & financial protection

Close positiverelationship betweenlevels of governmentspending & financial

protection

Close positiverelationship betweenlevels of governmentspending & financial

protection

Source: WHO NHA 2012

R² = 0.5389