- For the world's two billion poor people who live in rural areas, many goals would be advanced if private out-of-pocket spending were substantially replaced with prepaid community financing schemes. Such schemes could use the current spending more efficiently and effectively, improve the quality of health care, and pool some of the risks to reduce impoverishment due to large medical expenditures.
- To the extent that they are affordable, social insurance schemes have the greatest potential for providing effective risk protection. In low-income countries, such schemes are likely to be limited to workers in the formal sector. As national income rises, governments can expand such coverage by providing subsidies from general tax revenues. In high-income countries, compulsory universal systems are likely to be cost-effective.
- Private insurance has high administrative costs and tends to decrease risk-pooling. From an equity perspective, adverse effects are minimized if it functions in a supplementary role (to social insurance) to cover otherwise uncovered services and to provide higher levels of service quality. In high-income countries, upper-income individuals are likely to demand such coverage, because they want better care than public arrangements typically provide.
- Basic public health and preventive care will generally have to be tax-supported if a nation wants to have a cost-effective pattern of resource allocation to maximize health status. Out-of-pocket payment or insurance schemes are likely to under-provide such services from an allocative efficiency viewpoint.
- These observations in turn lead us to a view about the appropriate financing strategy for countries at different income levels.
- Low-income countries: Social insurance for the formal sector; community financing in rural areas--with modest subsidies from general revenue; public services for the poor, perhaps user fees for public hospital care, with low-income exceptions, if these can be properly implemented.
- Middle-income countries: A similar overall strategy with more subsidies for expanding the social insurance system and extending community financing to secondary care. Public services need to be organized in a way that is accessible to the poor.
- High-income countries: Universal social insurance with general tax revenue subsidies for low-income groups has much to recommend it. Private insurance is likely to play a role for upper-income groups.
Sunday, June 23, 2013
How to finance your health care system
Here's Roberts and Hsiao with some wonderfully specific and concise suggestions on health system financing: