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.
⭐ 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.
| Model | Funding Source | Pooling Mechanism | Coverage | Key Examples | Pros | Cons |
|---|---|---|---|---|---|---|
| General Taxation (Beveridge) | Taxes (Income, Sales etc.) | National/Regional | Universal/Near-universal | UK (NHS), Canada | Equity, Comprehensive, Cost control | ↑Wait times, Potential underfunding, Less choice |
| Social Health Insurance (Bismarck) | Payroll contributions (Employer & Employee) | Social Insurance Funds | Contributory (Workers & dependents) | Germany, France, Japan | Quality, Choice, Solidarity | ↑Labor costs, Excludes informal sector, Complexity |
| Private Health Insurance | Premiums (Risk-rated/Community) | Private Insurers | Voluntary/Supplementary | USA, Switzerland | ↑Choice, ↓Wait times, Innovation | Equity issues, ↑Costs, Adverse selection, Cream-skimming |
| Community-Based Health Insurance (CBHI) | Member contributions, Subsidies | Local community/NGO pool | Members (Often rural/informal) | India (e.g., some state-level CBHI), Rwanda | ↑Access for poor, Community ownership | Small risk pool, Limited benefits, Sustainability issues |
| Out-of-Pocket (OOP) | Direct payments by individuals | None (Individual burden) | User pays (No pre-payment) | Many LMICs (incl. India heavily) | No premium, Direct user accountability | Catastrophic 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.
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