Health Financing Methods

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Intro & Core Functions - Money Map Medics

Health financing is the science of how money is mobilized, accumulated, and allocated to cover health needs.

  • Goals: Ensure equity, efficiency, quality in healthcare, and achieve Universal Health Coverage (UHC).
  • Core Functions (📌 CPR):
    • Revenue Collection: Gathering funds from various sources.
    • Risk Pooling: Spreading financial risks across population.
    • PuRchasing of Services: Allocating funds to healthcare providers.

Health Financing System Functions

⭐ The three main functions of health financing are revenue collection, pooling of funds, and purchasing of services.

Major Financing Models - Payment Plan Parade

Understanding how healthcare is paid for is crucial. Different models balance equity, efficiency, and quality. These models often exist in mixed forms within a country's health system.

ModelFunding SourcePooling MechanismCoverageKey ExamplesProsCons
General Taxation (Beveridge)Taxes (Income, Sales etc.)National/RegionalUniversal/Near-universalUK (NHS), CanadaEquity, Comprehensive, Cost control↑Wait times, Potential underfunding, Less choice
Social Health Insurance (Bismarck)Payroll contributions (Employer & Employee)Social Insurance FundsContributory (Workers & dependents)Germany, France, JapanQuality, Choice, Solidarity↑Labor costs, Excludes informal sector, Complexity
Private Health InsurancePremiums (Risk-rated/Community)Private InsurersVoluntary/SupplementaryUSA, Switzerland↑Choice, ↓Wait times, InnovationEquity issues, ↑Costs, Adverse selection, Cream-skimming
Community-Based Health Insurance (CBHI)Member contributions, SubsidiesLocal community/NGO poolMembers (Often rural/informal)India (e.g., some state-level CBHI), Rwanda↑Access for poor, Community ownershipSmall risk pool, Limited benefits, Sustainability issues
Out-of-Pocket (OOP)Direct payments by individualsNone (Individual burden)User pays (No pre-payment)Many LMICs (incl. India heavily)No premium, Direct user accountabilityCatastrophic costs, Inequity, ↓Access, Impoverishment

India's Health Finance - Rupee Remedy Routes

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High‑Yield Points - ⚡ Biggest Takeaways

  • Out-of-Pocket Expenditure (OOPE) is India's largest health financing source, often catastrophic.
  • Tax revenue primarily funds public health services and national programs.
  • Social Health Insurance (e.g., ESIS, CGHS) covers formal sector employees.
  • PM-JAY (Ayushman Bharat) is a major government-funded scheme for vulnerable populations.
  • Risk pooling is crucial for health insurance to distribute financial burdens.
  • National Health Accounts (NHA) track health expenditure flows within the country.
  • User fees in public facilities can deter access for economically weaker sections.

Practice Questions: Health Financing Methods

Test your understanding with these related questions

In implementation of a health programme, best thing to do is -

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Flashcards: Health Financing Methods

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Bed turnover ratio is an example of _____

TAP TO REVEAL ANSWER

Bed turnover ratio is an example of _____

utilization rate (Utilization rate/Health care delivery indicator)

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