DESK REVIEWS | 02.02.01. How is the health system financed?
DESK REVIEW | 02.02.01. How is the health system financed?
The Brazilian health system is financed through taxes, social contributions (taxes for special programmes), out-of-pocket spending, and employers’ healthcare contributions (Paim et al., 2011). The financing of the SUS is funded by the public sector through three levels of governance (federal, states, and municipalities) and it is guaranteed by the Federal Constitution of 1988 (Presidency of Republic of Brazil, 1988). Funding for the SUS comes from tax revenues and social contributions of the federal government, and from state, and municipal budgets (Paim et al., 2011). The federal government is the main financing body and follows a calculation based on GDP that reveals the percentage to be invested in SUS per year (Presidency of Republic of Brazil, 2012, p. 141).
According to the Law N. 141 (2012), states and municipalities must invest a minimum of 12% and 15% of their revenue in SUS, respectively (Presidency of Republic of Brazil, 2012). However, funding for the SUS has not been enough to ensure adequate or stable financial resources for the public system (Paim et al., 2011). The private health sector is financed both by the SUS (via services contracted-out by the public health system) and by private sources such as individuals who make out-of-pocket payments for private health services and employer’s healthcare contributions. Data show that in 2017, private health services accounted for 66.8% of families’ health-related expenditure (Brazilian Institute of Geography and Statistics, 2019a).
Brazilian Institute of Geography and Statistics. (2019a). Conta-satélite de saúde: Brasil: 2010-2017. https://biblioteca.ibge.gov.br/index.php/biblioteca-catalogo?view=detalhes&id=2101690
Paim, J., Travassos, C., Almeida, C., Bahia, L., & Macinko, J. (2011). The Brazilian health system: History, advances, and challenges. The Lancet, 377(9779), 1778–1797. https://doi.org/10.1016/S0140-6736(11)60054-8
Presidency of Republic of Brazil. (1988). Federal Constitution of Brazil. http://www.planalto.gov.br/ccivil_03/constituicao/constituicao.htm
Presidency of Republic of Brazil. (2012). Lcp 141. http://www.planalto.gov.br/CCIVIL_03/LEIS/LCP/Lcp141.htm
Projeto de Lei do Senado n° 74, de 2014. (2014). https://www25.senado.leg.br/web/atividade/materias/-/materia/116394
The public health system is fully financed by the Government from taxation, following the policy that no one in Hong Kong should be denied medical care due to lack of means. Nearly 93% of the costs involved in delivering public health services are financed by public funding. The public system, thus, serves as a safety net for residents by making public health services available to all residents at an affordable price. People who have financial difficulties are exempted from payment of medical fees and charges for health services. Under the medical fee waiving mechanism, recipients of the Comprehensive Social Security Assistance and other vulnerable groups are waived from payment of public health care expenses when they meet certain financial and social criteria (Food and Health Bureau, 2017b).
The private health system is financed through patients’ out of pocket payments and it offers healthcare services to those who can afford them and are willing to pay for more flexible services at their own expense (Food and Health Bureau, 2017b). The Government also provides different funds for patients in need to pay for their medical fees and charges, for example, the Samaritan Fund, the Community Care Fund Medical Assistance Programmes, and the Health Care Voucher. The Samaritan Fund provides financial assistance to needy patients for designated privately purchased medical items or new technologies of medical treatment which are not covered by the standard fees and charges in public hospitals and clinics (Hospital Authority, 2020c). The Community Care Fund Medical Assistance Programmes assist patients in purchasing specified self-financed cancer drugs, ultra-expensive drugs, and specified implantable medical devices for interventional procedures (Hospital Authority, 2020a). The Health Care Voucher provides an annual amount of $2,000 to older people aged 65 and above which allow them to choose private health services including preventive care (Health Care Voucher, 2019).
Food and Health Bureau. (2017b). Report of the Strategic Review on Healthcare Manpower Planning and Professional Development.
Health Care Voucher. (2019, June 26). Background of Elderly Health Care Voucher Scheme.
Hospital Authority. (2020a). Community Care Fund Medical Assistance Programmes. Retrieved from https://www.ha.org.hk/visitor/ha_visitor_index.asp?Content_ID=206049&Lang=ENG&Dimension=100&Parent_ID=10044&Ver=HTML
Hospital Authority. (2020c). Samaritan Fund. Retrieved from https://www.ha.org.hk/visitor/ha_visitor_index.asp?Content_ID=10048&Lang=ENG&Dimension=100&Parent_ID=10044
Household health expenditures comprised 54.3% (including insurance contributions) of THE in 2017-2018 (NHSRC, 2021). Out-of-pocket (OOP) expenditures contributed to 48.8% of THE in 2017-2018 (NHSRC, 2021). Government health expenditures comprised 40.8% of THE in the same period (NHSRC, 2021).
Of the Current Health Expenditure, Union Government and State Government’s share is Rs.60,442 crores (12%) and Rs.90872 crores (18.1%) respectively in 2017-2018 (NHSRC, 2021). Local bodies’ share is Rs.4965 crores (1%), Households share (including insurance contributions) about Rs.3,008,225 crores (61.4%, OOPE being 55.1%) (NHSRC, 2021). Enterprises contribution (including insurance contributions) is Rs.26,335 crores (5.3%), NGOs is Rs.7,936 crores (1.6), and funding from external donors contributes to about Rs.2955 crores (0.6%) in 2017-2018 (NHSRC, 2021).
National Health System Resource Centre (NHSRC). (2021). National Health Accounts-Estimates for India: 2017-2018. Ministry of Health and Family Welfare, Government of India. Available from: https://nhsrcindia.org/sites/default/files/2021-11/National%20Health%20Accounts-%202017-18.pdf
The NIHS/BPJS is a single quasi-government entity and the biggest single-payer system globally (Agustina et al., 2019, pp.76,88). The system is financed from three sources. First, contributing members pay insurance premiums. Second, for non-contributing members the insurance premiums are covered by the government of Indonesia. Third, additional revenue is received from income tax, tobacco tax, district-level payments as well as grants from overseas development agencies (Agustina et al., 2019, p.88). However, a World Bank report maintains that despite reform, out of pocket spending for health continues to be one of the main financing mechanisms of the health care system (World Bank, 2016b, p.4).
The NIHS/BPJS system contracts primary care providers as well as hospital providers directly. Primary care providers are paid through a capitation system and advance payments, while secondary providers (hospitals) are reimbursed through diagnosis-based group (CBG) tariffs allocated by the Ministry of Health (Agustina et al., 2019, pp.76,88). The direct contracting system enabled the NHIS to enrol 20,000 primary care providers, 907 public and 1,106 private hospitals as well as pharmacists, dispensaries, laboratories, and radiology centres (Agustina et al., 2019, p.89).
In terms of allocation of funding, it is clear that political emphasis lies on curative and rehabilitative care. The largest share of health expenditure accounts for hospital care (over 65%), with approximately 50% financing in-patient and 15% percent financing outpatient care. A further 20% of health expenditure support care in the Puskesmas and in private clinics. Less than one per cent of the budget are allocated for prevention and health promotion (World Bank, 2016b, p.5).
Agustina, R., Dartanto, T., Sitompul, R., Susiloretni, K. A., Suparmi, Achadi, E. L., Taher, A., Wirawan, F., Sungkar, S., Sudarmono, P., Shankar, A. H., Thabrany, H., Susiloretni, K. A., Soewondo, P., Ahmad, S. A., Kurniawan, M., Hidayat, B., Pardede, D., Mundiharno, … Khusun, H. (2019). Universal health coverage in Indonesia: concept, progress, and challenges. The Lancet, 393(10166), 75–102. https://doi.org/10.1016/S0140-6736(18)31647-7
World Bank. (2016b). Indonesia Health Financing System assessment: spend more, spend right & spend better. Available at: http://documents.worldbank.org/curated/en/453091479269158106/pdf/110298-REVISED-PUBLIC-HFSA-Nov17-LowRes.pdf
Health care in Kenya is financed through three main sources (Munge & Briggs, 2014):
- Direct payments (out-of-pocket payments (OOP)): This forms the highest proportion out of the sources of health-care financing for public health expenditure and fully for private health expenditure,
- Government expenditure (through taxation, employer schemes, health insurance etc.),
OOPs are charged for health care services in public and private health institutions and accounted for nearly 30% of the total expenditure on health, thus reducing access to care. However, recently there has been an increase in government investment to reduce the financial burden on the poor and vulnerable populations through abolishing user fees in public health facilities (e.g., Makueni County), the provision of free maternity and the introduction of a Health Insurance Subsidy Programme. Half of the total health budget is allocated to the three referral hospitals and the remaining resources are allocated to the 47 counties. Payments are provided in block grants, depending on the size of the population, poverty levels, land share etc. Apart from the county Departments of Health budget from the national government (forming 36.4% of the total budget), the counties also collect their own revenue through households (37.3%), donors (16.3%) and NGOs (10.1%) (Maina et al., 2016). Donor funding is mainly concentrated in areas with high HIV prevalence such as Siaya, Kisumu, Migori, Mombasa and Turkana (T. Maina et al., 2016). This funding is channelled either through the government budgetary system referred to as “on-budget” or through the extra-budgetary known as “off-budget” via donor administered programmes e.g. the World Bank Multi-Country HIV/AIDS Programme (MAP) or NGOs (KNASA & NACC, 2014). The private sector is mainly funded by donors through grants/programmes to NGOs, health insurance (Marek et al., 2005) and out-of-pocket payments.
KNASA, & NACC. (2014). Kenya National Aids Spending Assessment Report for the Financial Years 2009/10-2011/12. https://unaids-test.unaids.org/sites/default/files/unaids/contentassets/documents/data-and-analysis/tools/nasa/20141017/kenya_2009_en.pdf
Maina, T., Akumu, A., & Muchiri, S. (2016). Kenya County Health Accounts: Summary of Findings from 12 Pilot Counties. Washington, DC. https://www.healthpolicyproject.com/pubs/7885_FINALSynthesisreportoftheCHA.pdf
Marek, B. T., Farrell, C. O., Yamamoto, C., & Zable, I. (2005). Trends and Opportunities in Public-private Partnerships to Improve Health Service Delivery in Africa. Human Development Sector Africa Region, The World Bank. https://documents1.worldbank.org/curated/en/480361468008714070/pdf/336460AFR0HDwp931health1service.pdf
Munge, K., & Briggs, A. H. (2014). The progressivity of health-care financing in Kenya. Health Policy and Planning, 29(7), 912–920. https://doi.org/10.1093/heapol/czt073
Each of the subsystems that form the health system in Mexico is financed differently. The IMSS and ISSSTE, the two main social security institutions for those in formal employment in the private and public sectors respectively, are financed based on a three-party funding scheme with fees provided by the employer, the employee, and the government; whereas public services provided by the MoH are funded entirely through general taxes. In addition, other institutions have their own health services and social security benefit schemes and financing such as the Navy and the Army (Armed Forces), and public companies such as PEMEX.
The public sector is financed through general taxation and equals 48.37% of the total health expenditure being funded by the State (StatsSA, 2012), serving 84% of the population (Mahlathi & Dlamini, 2015). The private sector is funded by voluntary medical aid membership (66%) and out-of-pocket payments (29.7%) (EMERALD, 2017) and comprises about 51.63% of the country’s total health expenditure (StatsSA, 2012), serving only 16% of the population (Mahlathi & Dlamini, 2015). Approximately 8.5% of GDP is spent on health, whereby 4.1% is spent by the public sector on 84% of the population and 4.4% spent by the private sector on 16% of the population (Fusheini & Eyles, 2016).
EMERALD. (2017). Moving towards Universal Health Coverage for Mental Disorders in South Africa.
Fusheini, A., & Eyles, J. (2016). Achieving universal health coverage in South Africa through a district health system approach: conflicting ideologies of health care provision. BMC Health Services Research, 16(1), 1–11. https://doi.org/10.1186/s12913-016-1797-4
Mahlathi, P., & Dlamini, J. (2015). MINIMUM DATA SETS FOR HUMAN RESOURCES FOR HEALTH AND THE SURGICAL WORKFORCE IN SOUTH AFRICA’S HEALTH SYSTEM: A rapid analysis of stock and migration. Available from: http://www.prographic.com/wp-content/uploads/2016/07/0316-south-africa-case-studies-web.pdf
StatsSA. (2012). South Africa Health expenditure: Total vs Private – South Africa Data Portal. South Africa Data Portal. Available from: http://southafrica.opendataforafrica.org/rtwhibg/south-africa-health-expenditure-total-vs-private