Elsevier

Health Policy

Volume 56, Issue 3, June 2001, Pages 171-204
Health Policy

A descriptive framework for country-level analysis of health care financing arrangements

https://doi.org/10.1016/S0168-8510(00)00149-4Get rights and content

Abstract

Health financing policies are marked by confusion between policy tools and policy objectives, especially in low and middle income countries. This paper attempts to address this problem by providing a conceptual framework that is driven by the normative objective of enhancing the ‘insurance function’ (access to needed care without financial impoverishment) of health care systems. The framework is proposed as a tool for descriptive analysis of the key functions, policies, and interactions within an existing health care system, and equally as a tool to assist the identification and preliminary assessment of policy options. The aim is to help to clarify the policy levers that are available to enhance the insurance function for the population as efficiently as possible, given the ‘starting point’ of a country's existing institutional and organizational arrangements. Analysis of health care financing systems using this framework highlights the interactions of various policies and the need for a coherent package of coordinated reforms, rather than a focus on particular organizational forms of ‘health insurance’. The content of each main health care system function (revenue collection, pooling of funds, purchasing of services, provision of services) and the market structure with which the implementation of each is organized are found to be particularly important, as are policies with respect to the benefit package and user fees.

Introduction

Health care in the UK is funded mainly from general tax revenues, and providers are paid from territorial health authorities of the National Health Service. In the Netherlands, health care is funded mainly from compulsory contributions by employers and employees to social insurance ‘sickness’ funds and voluntary contributions to private insurance companies, both of which in turn pay providers. In both countries, virtually the entire population enjoys access to needed health care and is shielded from the risk of incurring expenditures that would otherwise be high enough to impoverish some individuals or families. In other words, the health care systems of both countries provide the function of health insurance (access to care with financial risk protection) to their populations, albeit with different institutional and organizational arrangements for the mobilization and allocation of resources. Analyzing policy options in terms of the extent to which this ‘insurance function’ is enhanced1 and the efficiency with which it is administered, offers a useful way to operationalize the objectives of health care financing policy, unfettered by an attachment to any particular organizational form of health insurance.

This paper is motivated by the perception that, with respect to health care2 financing, there is frequently a confusion between policy tools and policy objectives, especially in lower and middle income countries. This has certainly been the case with many reforms involving health insurance, where the focus has been on establishing or refining insurance schemes, while the effects of these on the efficiency and equity of the broader system are either assumed or neglected entirely. In addition, the development of these reforms sometimes proceeds without any reference to the existing health care system in a country.

This paper provides an alternative approach based on two simple principles. First, reforms should be oriented to explicit policy objectives. Second, the starting point for change in any country is the existing organization and institutional arrangements of its health care system. Hence, an adaptable framework rather than a ‘blueprint’ is needed to assist national health care policy makers to move their systems towards their objectives.

This paper begins by presenting the conceptual framework intended to help countries to identify a coordinated set of policies to enhance the insurance function of their health care systems. The next three sections incorporate lessons from country experience into a review of the various elements of the framework. The paper concludes with a review of selected key policy issues.

Section snippets

Conceptual framework

Often, health systems are described by their predominant source of funding (e.g. social health insurance ‘Bismarck’ systems, general tax-funded ‘Beveridge’ systems). As many countries have introduced significant reforms without altering the source of funds for health care, however, there is growing recognition that the source of funds need not determine the organizational structure of the sector, the mechanisms by which resources are allocated, nor the precision with which entitlement to

Collection: sources of pooled funds and contribution methods

While recognizing that apart from external donors, the population (including individuals and corporate entities) is the initial source of all funds (as shown by the ‘Contributions’ arrow in Fig. 1), Table 1 describes the range of possible sources of funds, methods by which these funds are contributed, and organizations that collect prepaid4

Benefit package and out-of-pocket payment: opposite sides of the coin

Operationally, it is useful to conceptualize the benefit package not simply as a list of services to which the population (or beneficiaries of an insurance scheme) is entitled, but as those services, and means of accessing services, for which the purchaser will pay from pooled funds. This definition implies that services not included in this package are those for which direct out-of-pocket payment by users is required to fully or partially finance their provision. This definition is useful for

Regulation and information to improve policy outcomes

The conceptual framework presented so far is incomplete. Although issues relating to the regulatory environment have been mentioned, the role of regulation and information as policy tools to enhance the insurance function of health systems needs to be addressed more fully. Fig. 3 provides an outline of the overall conceptual framework that incorporates these important tools for implementing public policy. Of course, the range of available policy tools extends beyond regulation and the provision

Conclusions

The framework presented in this paper is proposed as a tool for descriptive analysis of the key functions and interactions within an existing health care system. The review of the components of the health care system provided above suggests that progress towards the objectives of health care financing policy requires a comprehensive approach involving coordination among multiple aspects of health care systems rather than an approach aimed at reforms in these aspects in isolation from each

Acknowledgements

Earlier versions of this paper were presented at meetings in Bangkok, Mexico City, Geneva and Washington during 1998 and 1999, while the author was a staff member in the headquarters office of the World Health Organization. The terminology used herein was finalized in May 1999 following a presentation of the conceptual framework to a joint WHO/World Bank meeting in Geneva. The paper has benefited from detailed comments on earlier drafts and presentations from Christian Baeza, Jan Bultman,

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