1. Health Care Financing
Dr. Nilar Tin
Director (Planning)
Department of Health

2. What is a Health System?
What are the Goals?
What are the functions?

3. What is a Health System?
Health systems
consist of all
organizations, institutions and
resources that are devoted
to
producing health actions

4. Health system functions and goals
Goals
Good health outcomes
Responsiveness
Fairness in financing
Functions
Service delivery
Resource generation: HWF, supplies, information
Financing
Governance and stewardship

6. Health Systems, Programs and Determinants
Health Systems, Programs and
Interrelationship
Governance,
financing, Determinants Interrelationship
resource
Health
Social,
creation, service
Systems
economic,
provision
cultural,
environmental,
geographical
Health
and political
Outcomes
Health
Programs
Health
Determinants
Promotive, preventive,
curative, rehabilitative

7. Concept: Health care financing is a process of
mobilizing, allocation and utilization of financial
resources in health sector.
Resource
Resource
Resource
generation
pooling
payment
1. Ensuring adequate and sustainable amount of
resources to health care
2. Reducing OOP health expenditure, removing
financial barriers to care, and reduce catastrophic
effect and impoverishment due to illness
3. Improving efficiency and effectiveness of health
care financing

8. The objectives of HF are
 to maintain and access to all basic health
services
 to improve quality of services generally so
that utilization of health services and
facilities will increase-increasing efficiency of
resource utilization
 to create incentive for providers and
consumers to use more services efficiently
through various payment methods

9. Health
financing
and
its
sub-functions
Three functions:
Revenue collection

Risk pooling

Purchasing

In health financing, funds(revenues, contributions.)
are collected

accumulated in (a) pool (s)

allocated to health services/providers


10. Questions that need answers for understanding HF
• Are resource mobilization mechanisms equitable?
Do the wealthier subsidize the poor?
• Is the distribution of resources equitable?
Efficient?
Or
are
wealthier
populations
benefiting more from public financing than are
poor populations?
• Do provider
Quality?
payments
reward
efficiency?

11. I. Resource Generation
1.Amount of Resources
Health expenditure per capita:
% of government budget to health care
% of GDP (Gross Domestic Product) on health
Pakistan
Indonesia, Lao PDR, Philippines
Thailand. Malaysia
India
Vietnam
China
Mongolia, Korea, Taiwan
Japan
-2.4%
-3%
-4%
-4.8%
-5.4%
-5.6%
-6%
-8%

12. Health expenditure per capita:
% of government budget to health care
-is being connected with Life Expectancy at birth
trends
%HE
Lao PDR
Singapore
India
Vietnam
ROK
Japan
LE0
3
3.6
4.8
5.4
6
8
62
80
64
72
78
84

13. Health care expenditure depends upon
-
Income or economic development
-
Political will and commitment
-
System of resource allocation
- Not only how much being used but
- How effectively to spend/ to invest in health
care
- Using for infrastructure?
- Using for curative?
- Using for preventive? Or promotive care?

14. Us
by er ch
a
sec publi rges
t or c
CC
S
at e O O P
riv orP ct
se
Pu
b
Int
e
NG rnati
Os ona
l
lic
-T
ax
es
2.Sources of Financing for Health
ivate
Pr
ealth ce
H
n
sura
In
Co
mm
HI
sch unity
bas
em
e
ed
Soc
ial
He
Ins
alth
ura
n ce

15. 1.Public Sources of Financing
• Governments raise funds through taxes, fees,
donor grants, and loans.
• MOF allocates general tax revenue to finance
MOH budget.
• Govt health budgets
-based on previous year’s budget
•
-adjusted annually to account for inflation
-budgets usually have separate line items
(for personnel, hospitals, pharmaceuticals,
supplies, fuel, training, etc for recurrent costs
• Capital budget- paid through donor grants,

16. a)Tax based financing
• Typical source of public fund-direct taxation of
individual and business incomes, and other kinds
of direct or indirect levies (import duties, license
fees, property taxes, sales and market taxes,
registration, etc)-higher tax for higher income
groups
• Developing country-large portion of economically
active population in informal sector- tax base
might be small
• Ear marked taxes- increasing government
revenues –eg tobacco
• Health services through tax revenues is most

17. b) User Fee system (CCS in Myanmar)
• Public facilities receive government subsidies
but lack funds to function appropriately
• User fee collect modest fund-well below private
market prices in public hospitals-eg; CCS
• User fee depress demand for services that are
not really needed
• Poor can be protected by exemption mechanism

18. c) User Fee system (Pre paid card)
• Pre-paid system is based on pooling of risks
• Small amount of contribution from community
• Can donate to poor
• Charges will deduct from the care per visit
• Preformed myths-hindering from buying cardswill bring illness to one of the families

19. Government Financing of Health Care
• Includes health expenditure of all levels of
government
• Unlike private markets Gov health financing is
able to satisfy social requirements of efficiency
& equity
• Incentive to supply public goods
• No neglect of externalities/spillover effects
• Explicit concern to tackle poverty
• Core responsibility of Gov to ensure supply of
these services

20. 2. Private Sector-Direct payment to providers
•
•
•
•
•
•
•
•
For Profit only
Expensive
May have quality
Not directed to health but to illnesscurative only
Would like to have more turnover rate
No merit goods
Neglect externalities/spill over effect
No equity issue/pro poor health approach

21. a).OOPs Out-of-Pocket payment
• “Out-of-pocket” expenditure on health by
households includes all types of health-related
expenses incurred at the point of receiving
service - consultation fee,
-purchase of medicine,
-laboratory services,
-diagnostic services and
-hospitalization
• Main determinant of catastrophic health
expenditures for families– Reduce expenditures on other basic needs
– Push some households into poverty
– May cause consumers to forgo health services and suffer
illness

22. 3. External funding for health-Donors/Lending
Agencies
• Multilateral donors –give a gift /grants: Public
donors WHO,UNICEF, UNFPA, UNHCR
• Lending agencies-World Bank, ADB –lend large
amount, hard loans-high interests, soft loans-less
than market rate. Hard loans- interests for first
five years and I+ Principle x 15 years ,later hard
loan becomes soft then become a grant
• Bilateral donors- USAID, JiCa, DANIDA, CIDA
between two countries-grants, ties are smaller,
• Private donors-Red Cross, Red Crescent, MSF,
WVision

23. External Sources-International NGOs
• Intermediaries between Donors/Lending
Agencies and the Recipient Countries
Donor
loan
grant
Intermediaries
Recipients
technical assistance
Problem: duplication and overlap in function and
coverage

24. 4. Health Insurance
• A system in which prospective consumers of care make
payment to a third party in the form of health
insurance scheme (premiums), which in the event of
future illness will pay the provider of care for some or
all of the expenses incurred.
Insurance Agency
Payment
Premium
GOVT
claims
Provider
insurance cover
health care
Consumers
out-of-pocket payments

25. 4. Health insurance is a mixed source of finance
It draws contributions/premiums from both
employers, employees and sometimes from
government
Three types of insurance
1. Government of social insurance: provide
compulsory or to a lesser extent voluntary
coverage for people from formal sector
(egSSB) Premiums are generally based on
income.

26. 2. Private insurance: provides coverage for groups
or individuals through third party payer
institutions operating in the private sector.
Premiums based on actual calculation of
incidence of disease and use of services.
Vary with age and sex.
3. Employer-based insurance: refers to coverage
between the above two categories, in which
employer plays a third party payer or collecting
agent with eligibility based upon employment
status.

27. Insurance markets suffer from market
failure
Due to
 Moral Hazard
 Adverse Selection
 Imperfect information
Big pool of risks between healthy and unhealthy,
and between better off and poor. Cannot cover
bypass surgery
Good design
– need gate keeping
-capitation
-deductibles
-co-payment
-DRG

28. 5. Community based Health Insurance
• Community health insurance is
• “any not-for-profit insurance scheme aimed
primarily at the informal sector and formed on the
basis of a collective pooling of health risks, and in
which the members participate in its management.”
• Two essential features of CBHI:
1. Affiliation is based on community membership
and the community is strongly involved in managing
the system
2. Members share a set of social values

29. Community Based Health Insurance
Models of CBHI
C
B
O
Insurer
Reimbursement
Provider
N
G
O
Premium
Premium Community
Intermediary model
Care

30. Community Based Health Insurance
Models of CBHI
NGO/CBO + Insurer
Fees
Community
Insurance model
Provider
Premium
are
C

31. Community Based Health Insurance
Models of CBHI
Premium
er a C
Provider + Insurer
Community
HMO model

32. CBHI Strengths
 Better access to health care for the poor
 More responsive to client needs since
organized along community lines
 Often start up is small, but then evolve into
larger arrangements involving other financing
instruments.
 Often used by governments as a
supplementary tool for extending health
coverage, especially for informal and
unorganized sector workers, and rural

33. CBHI Weaknesses
 Limited resources, small size and insufficient
coverage: thus offer limited protection for
members
 Sustainability: small size of the pool makes
these schemes unviable and unsustainable.
 The often voluntary nature of contribution
can lead to adverse selection, driving up the
cost and at the same time making the
resources collected even less than the
targeted amounts.

34. CBHI Weaknesses
• Often need outside financial and management
support
• Limited benefit to the poorest part of
population; cash-poor people may not be able to
participate
• Limited effect on delivery of care: evidence
suggests that by and large such schemes are
not able to negotiate better quality of care and
thus do not improve the efficiency of health
care

35. Com posi t ion of t ot a l h ea l t h spen di n g
i n SEA R
27%
3%
4%
66%
OOPs
socia l in su r a n ce
pr iv a t e in su r a n ce
tax

36. Methods of Financing
• Universal Coverage: All residents are
covered
• Equal Access: All members have equal
access to health care
• Equity in Financing: Financing method
addresses ability to pay
• Efficiency: Minimizes administration cost

37. • Universal Coverage:
Every one will be provided with a service when a
need arisen
Out of pocket payments at the point of consumption
should not exceed 30% of a person's income
Service must be reached a certain minimum
standard

38. Factors controlling the Impact & Efficiency
of the Health Care System
 1. Number of Health Workers
 2. Training of Health Workers
 3. Method and level of compensation
 4. Method and level of consumer payment
 Risk pooling
 Provider incentive
 5. Equity of Access

39. Factors controlling the Impact & Efficiency
of the Health Care System
 6. Stock of Capital Equipment
 7. Technologies used
 Financial incentives & Constraint




8. Preventive Care (Minimum essential package)
Immunization
Pre-natal
Malaria, TB

40. Myanmar Health Expenditure (2002-05)
 Total Health Expenditure=26 billion kyats
 Total health expenditure as % of GDP= 2.11
(2005)
 MOH Expenditure by line items during last 5
years plan





Salary
Goods and services
Training
Maintenance
TA
=
=
=
=
=
45%
28%
15%
9%
3%

41. Health care providers and population in
Myanmar
• Access to medicine????? <2% of GDP use for
health
• Health care for all, with them and by them
• 30%urban
• 70%rural
Doctors,
specialists
midwives

42. National Health Policies on Financing
 To explore and develop alternative health
care financing system
 To augment the role of co-operatives,
joint ventures, private sectors and NGOs
in delivery of health care in view of the
changing economic system
 To strengthen collaboration with other
countries for national health development

43. Myanmar Health Care Financing
We’ve doneTax based health care-free
SSB- for employees
Public/private mix
CCS –with exemption mechanism
RDF –look into poor
Trust fund –interests for poor
Booming private sector
Later---CBHI, others--Main aim should be “Protect people from financial
catastrophe during illness”
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