Dr.
Abdalle
CHAPTER TWO:
HEALTH CARE EXPENDITURE AND THE HEALTH CARE FINANCING
ADMINSTRATION
Health Expenditure Patterns
WHO Global Strategy for Health Development has stressed the importance of
efficiency in the use of resources as a vital element of health development and
recommends preferential allocation to primary and intermediate care services,
especially for currently underserved rural populations.
In most countries, reallocation of resources has been suggested so as to
strengthen primary care and adopt new technology and health programs which
will be cost-effective and adjudged as possessing anticipated benefits.
Health care financing is visible and central on the global health stage,
especially, for countries wishing to achieve universal health coverage (UHC) so
as to improve their health status in the face of declining donor funds. The range
of services or programs requiring funding for all population groups includes:
1. Institutional care – teaching hospitals, general hospitals, mental and other
special hospitals, long-term care, residential care, Pharmaceuticals and
vaccines,
2. Ambulatory care – primary care, family care, pediatric care, prenatal care,
and medical specialist; medical, diagnostic, and treatment;
3. ambulatory and day hospital clinics; surgical, medical, geriatric, dialysis,
mental, oncological, drug and alcohol treatment,
4. Elderly support service centers,
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5. Categorical programs – immunization, maternal and child health, family
planning, mental health, STIs, HIV, tuberculosis preventions, screening for
birth defects, cancer, diabetes, hypertension,
6. Dental health,
7. Community health activities – healthy communities, health promotion in the
community for risk groups; smoking restriction, promotion of physical
fitness and healthy diet; environmental and occupational health; nutrition
and food safety, safe water supplies, special groups,
8. Research
9. Professional education and training -A situation where funds are limited,
unless where services are highly decentralized to ensure that essential
services that are capable of promoting national health needs and equity in all
the states are adopted, setting policy and standards to determine health
targets with adequate funding to promote national priorities will be difficult.
Macroeconomic Level of Health Care Financing
Health care financing has progressed from personal payment at the time of
service delivery to financing through health insurance (prepayment) by the
employer and employee in the workplace.
In macroeconomic financing, health expenditures are derived from government
and non-government sources and are used to finance a wide array of programs
and services.
Health systems are responsible for improving the health of individuals, and also
protecting them against the financial costs of disease and morbidity.
Health-care financing is termed as one of the core components of health
systems and most health care sector reform measures address health financing
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issues like mobilization of funds, distribution of financial risks, allocation and
utilization of services, as well as provider payment incentives.
Laws of Health Care Resource Allocation
The economic consequences of decisions some countries make in resource
allocation are the major issues that determine health care economics.
These laws include:
1) Sutton’s law: Willy Sutton specialized in bank robbery.
This law translates the idea that if more funds are available for treatment
services than preventive care services, that prevention of diseases will be
relatively underfunded. That will mean that treatment services will receive
greater emphasis than prevention.
2) Capone’s law: Al Capone was a well-known gangster who with his
colleagues planned the division of Chicago.
The law explains that resources are allocated according to mutual interests.
This expression in the health context means that planning in health care
service will reflect the interests of providers and not that of the general
public.
The law further explains that the concept of macroeconomics planning
serves the interest of the general public at the expense of that of the
individual patient.
3) Roemer’s law:
This law believes that hospital beds, once built and insured, that the beds
must be filled to capacity. That the supply of hospital beds is a key
determinant of health service utilization, especially if the public has health
insurance benefits that is for hospitalization.
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Consequently, the law believes that it is only by charging hospital payment
systems with incentives that will reduce utilization rate.
4) Bunker’s law:
The law believes that the more there are surgeons in a health care system,
the more the health care system will generate surgeries. This means that
the greater the number of surgeons employed in a health care system, the
more the number of surgeries they will perform and the less the number of
referrals they will make to other health care professionals.
Need and Demand
Need
The term need is used by both health and non-health professionals in
different and varying contexts.
Jonathon Bradshaw defines four ways in which need is perceived such as:
1) Normative need, based on professional judgment (such as the need for
medical treatment)
2) Felt need, which comprises individual's perceptions of variations from
normal health
3) Expressed need, which can be the vocalization of need or how people
use services
4) Comparative need, based on judgments by professionals as to the
relative needs of different groups
The population's ability to benefit from health care interventions is used as a
working definition of need.
The ability to benefit from health care can be influenced by several factors
including:
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1) the epidemiology of the disease
2) the effectiveness of interventions (Need for redefining needs)
3) Health and Quality of Life Outcomes
Therefore, a comprehensive needs assessment requires an assessment of
evidence of effectiveness.
The Demand for Health Care Services
Demand for health care services is the expression of felt need, which is the
services that people ask for.
Demand is influenced by factors such as :
1) Illness behaviour which is itself influenced by age, gender, education,
and socioeconomic class
2) Knowledge of services
3) Influences from the media.
4) the supply of services, which is itself influenced by the use of
guidelines, and evidence of clinical and cost-effectiveness.
HEALTH CARE FINANCING ADMINISTRATION
Intensive Care Administration
Intensive care administration focuses on efficiency, effectiveness , affordability,
and time savings are enormously important to consumers.
Improving Universal Health Coverage
The way a country finances its health care system is a critical determinant for
reaching UHC.
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This is so because, effective financing mechanisms will determine whether
health services exist or not. It will also show the extent to which services are
available and affordable to the populace. The main thing is whether people can
use health care services when they need them.
This can be achieved by a well-planned combination of all health care financing
mechanisms which include:
1. Tax-based financing
2. Out-of-pocket payments (OOPS)
3. donor funding
4. Health Insurance
5. Exemptions
6. deferrals (to delay until a later time at times, for 6 months) and
7. Subsidies (money paid by Government to reduce cost of services).
The main thrust is on how to generate adequate revenue for financing health
care services for diverse groups of people, without much task on the formal
sector workers.
In the developing countries, the formal sector workers are the main group of
people that make contributions in form of tax and/or agreed upon
deductions.
There are however, three known approaches of how to improve universal
coverage in areas where those employed in formal sector are small in
number. These include:
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1) Contributory schemes; like community-based health insurance (CBHI)
where households in a particular community contribute to the Insurance
Scheme
2) Tax-funded health scheme, where health services for those outside are
funded from tax
3) Introduction of a "one-time National Health Insurance Scheme (NHIS)
premium payment policy" as an avenue to protect those not employed in
formal sector from financial risk.
It is necessary to note that health system financing is an essential component
of UHC but progress toward UHC requires coordinated actions across health
systems. Therefore, attention should be paid to strengthen human resources
for health.