Analysis of universal health coverage and equity on health. The affordable care act aca requires that insurers use a single risk pool when developing premiums. This is determined by both the overall level of prepaid resources and the structural arrangements architecture of pooling. This publication risk pooling in health care finance. Risk pooling suggests that demand variability is reduced if one aggregates demand across locations because as demand is aggregated across different locations, it becomes more likely that high demand from one customer will be offset by low demand from another.
This chapter focuses on two of the key functions of a health sector financing system. Shi pools both the health risks of the people on one hand, and the contributions of individuals, households, enterprises, and the government on the other. The executive board of who and the fiftyeighth world health assembly have. Insurance is the transference of risks from individuals. As laid out in the draft national health financing strategy hfs, the government is now considering several changes to how healthcare is financed and has strongly committed to raising revenue. Witter, sophie pooling is the health system function whereby collected health revenues are transferred to purchasing organizations. Equity in health care can take many forms but may most usefully relate to health care financing according to ability and access to health care services according to need who 2012.
It uses as its starting point the world health organization resolution calling for health care financing systems to provide universal coverage and financial protection for citizens. Classification of health care financing schemes ichahf. Pooling is the accumulation and management of funds from all sources in a way that insures individuals against the risk of having to pay the full cost of care outofpocket in the event of illness. Who risk pooling for universal health coverage uhc. How does risk pooling currently work in the individual market. Pooling ensures that the risk related to financing health interventions is borne by all the members of the pool. Health care financing schemes as the main building blocks of the functional structure of a. How health insurance in the individual market works. A crucial concept in health financing is that of pooling. Revenue collection and pooling arrangements in financing. Risk pooling is important to address equity and financial sustainability in health. Risk pooling for universal health coverage uhc prepaid revenues for health services can come through various sources such as taxes, compulsory insurance contributions payroll taxes, voluntary health insurance premiums, and external funding.
Pooling may be carried out by a wide variety of public and private agencies such as national ministries. Health financing functions revenue contribution and collection. The risk for fragmentation in health financing through insurance systems exists when there is more than. Org 3 what if more flexibility were allowed in the aca market rules. Furthermore, when health financing systems are aggressive based on greater risk pooling sharing, such as public resources and prepayments, the financial risk associated with health care is lower for households, and the pattern of risk sharing is equitable and efficient. If insurers were able to compete under different issue, rating, or benefit coverage requirements, it could be more difficult to spread risks in the single risk pool. Furthermore, adopting and operating financing how to cite this paper. The strategy aims to provide operational and practical guidance to member states in improving. The objective of pooling is to reduce the outofpocket price the patient pays when. Measuring and improving health outcomes in medicare. Health financing is the function of a health system concerned with the mobilization, accumulation and allocation of money to cover the health needs of the people, individually and collectively, in the health system. The mission of the hfs is to establish a comprehensive social health protection system for all tanzanians. This policy is aimed toward strengthening the current health sector financing systems and guide the development of strategic innovations to improve and sustain financial accessibility and resourcing.
The main focus of the section on fund pooling is on alternative strategies for reducing fragmentation in health care financing in order to maximize both income and risk crosssubsidies in the overall health care financing system. The who defines riskpooling as the accumulation and management of revenues in such. Although all health financing functions play an important role in ensuring financial protection, risk pooling and prepaymentwhether through taxes or individual premiumsplay the central and often the most poorly understood roles. Healthcare financing is one of the core components of health systems. A case study of jamaicas health financing system and its. Pooling is the health system function whereby collected health revenues are transferred to purchasing organizations. Revenue collection mainly occurs domestically via general and ear marked taxes. In the absence of risk pooling and cross subsidisation, those with low life time incomes or the poor accumulate lower balances in their medisave account, which in turn. Regional or local taxes are the main sources of financing health care in bulgaria, denmark, finland, norway and sweden. Taxbased health financing and health insurance both involve pooling. Health care financing is one of the core components of health systems.
Risk pooling is the collection and management of financial resources so that. Analysis of the health system in slovenia evaluating. Insurance is the transference of risks from individuals or corporations who cannot bear a possible unplanned financial catastrophe to. Results show that the jamaicas health financing system carries out its functions primarily through the ministry of health. The who defines risk pooling as the accumulation and management of revenues in such a way as to ensure that the risk of having to pay for health care is borne by all members of the pool and not by each contributor individually.
Risk pooling refers to the collection and management of. A desciptive framework for countrylevel analysis for health care financing arrangements. Thus in the medium term, no person should face risk of impoverishment when accessing health care nor should anybody forego medical services because of financial reasons. Pooling risk refers to trying to spread the risk of an individual across a number of individuals so that the chances that one person has to pay the full amount of a bad health event is minimized.
Pooling ensures that the risk related to financing health interventions is borne. Apr 30, 2015 formal definition of risk pooling pooling is the health system function whereby collected health revenues are transferred to purchasing organizations. The implications for health system performance by peter c. The role of risksharing mechanisms in finance health care and. In the absence of risk pooling, payments made for health services would. The goal of the hos program has been to gather valid, reliable, and clinically meaningful data that are used by. The methods of financing health care include tax supported, social security supported, employeremployee financed, charitable organizations, or consumer payment at the time of service. Most health sector reform measures attempt to address health financing issues such as mobilization of funds, distribution of financial risks, allocation and utilization of services, and provider payment incentives. Families may go into debt and sell critical assets in order to finance health services. The objectives of this paper are to raise the profile of pooling as a health financing policy instrument and to provide a simple classification of country pooling. Increased pooling, in national health systems or through insurance, benefits. Kakwani indices for different health care financing options status quo extended private schemes univers al coverage.
Pooling is a core function of health financing policy. Social health insurance shi is a form of financing and managing health care based on risk pooling. Most health sector reform measures attempt to address health financing issues such as mobilization of funds, distribution of financial risks, allocation and utilization. Pooling risks the accumulation and management of revenues in a. Lack of risk pooling and insurance could be argued as the main reasons for healthrelated impoverishment in developing nations 2. One of the important concepts in health care financing is the concept of pooling risk. When carefully implemented, these proposed financing reforms will jointly result in optimal. The private sector is small and tends to cater to people with medium to high incomes. The who considers health financing models with high risk pooled, such as health insurance and prepaid schemes, a promising means for achieving universal healthcare coverage and promotion health care. Health care expenditure involves money spent from all sources for the entire health sector, regardless of who operates or provides the services.
A userfriendly foldout table provides the international experience in the. It is a deeply ideological and political question with undertones of social involvement, personal responsibility, and freedom of choice. Risk pooling is the spreading of the financial risk associated with the need to use and pay for health services, rather than to be fully borne by the individual who falls ill. Universal health coverage ensures that all people can use the promotive, preventive, curative, rehabilitative and palliative health services they need, of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship has continued to dominate demate in health care. Risk pooling in health care financing citeseerx mafiadoc. Pdf on jan 1, 2018, ali ahangar and others published why are riskpooling and risksharing arrangements necessary for financing healthcare and improving health outcomes in low and lower middle. Health is important to economic development, and economic development has an important impact on health outcomes. Medifund was established as a meanstested scheme in 1993 to fill the gaps left by medisave and medishield. In insurance, the term risk pooling refers to the spreading of financial risks evenly among a large number of contributors to the program. Revenue collection concerns the sources of funds, contribution structures, and the means by. The larger degree of pooling, the less people will have to bear the health financial risks. Five key steps identifying and analyzing exposures examining alternative risk financing techniques selecting the best risk financing techniques implementing the selected techniques monitoring results of the risk financing techniques o glossary of risk financing terms ii. Health insurance products may not pay healthcare providers directly and can only provide for the payment of an amount to the policyholder. Health financing through direct taxation is common, for example, in belgium and united kingdom.
Health expenditure makes up a substantial part of the global economy. Health care financing schemes are perceived here as the main building blocks of the structure of a countrys health financing system. Hence, during the last decade, mobilization of funds. Often a key aim for equity of financing is that it is progressive i. It means risk sharing pooling plays a key role in all financing systems for achieving effectiveness and efficiency health systems. It concludes with suggestions for a number of measures of health system performance that can offer indications of the success of risk pool integration. Health care financing and the sustainability of health.
The answer to the question of who must pay for health care and how lies in the moral fabric and the value system of a society. Why are riskpooling and risksharing arrangements necessary. Health care financing and sustainability policy in line with the recently approved health sector policy to support the gor and health sector goals. Future vision for healthcare financing in south africa the department of health is in the process of implementing a system of social health insurance shi for south africa. The arguments in favor of risk pooling in health care embody equity and. As countries grow economically, pooled health financing in national health systems and health insurance comes to dominate revenues from user payments. As income levels in countries rise to a high level, changes in the health financing combination, in cluding a further decline in oop expenditure up to 14% and a further increase in private pooling up to 24% and publicgov ernmental resources up to 63% are observed in the highin come countries 1,2, 5. The new health care law does not allocate nearly enough money to. Pdf why are riskpooling and risksharing arrangements. Pooling ensures that the risk related to financing health interventions is borne by all the members of the pool and not by each contributor individually. Dec 21, 2019 risk pooling is the spreading of the financial risk associated with the need to use and pay for health services, rather than to be fully borne by the individual who falls ill. Risk pooling is an important concept in supply chain management. The who defines riskpooling as the accumulation and ma n. The world health organization considers health financing models with high risk pooled, such as health insurance and prepaid schemes, a.
Health financing profile south africa may 2016 overviewkey most health services in south africa about 86% are provided through the public sector, yet only about 50% of health expenditure comes from the government. A health insurance risk pool is a group of individuals whose medical costs are combined to calculate premiums. Strategy on health care financing for countries of the western pacific and southeast asia regions 5 supporting adequate, sustainable, equitable and effective health financing to improve health outcomes is one of the most important goals of the world health organization. Health care financing an overview sciencedirect topics. Pooling ensures that the risk related to financing health interventions is borne by all the members of the pool and not.
The purpose of pooling is to spread financial risk across the population so that no individual carries the full burden of paying for health care. Health financing for uhc consists of three core functions. Yet the implication of such health financing mech anisms is that the healthy will end up paying for some or all of the health care services used by the sick. Thus health financing policies across the world promote risk pooling mech anisms to protect people from this barrier to health care, often with special attention given to the poor. Under this system, insurance companies come together to form a pool, which can provide protection to insurance companies against catastrophic risks such as floods or earthquakes. A risk pool is one of the forms of risk management mostly practiced by insurance companies.
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