Universal Health Coverage

PETER ANNEAR: Welcome to this session on universal health coverage and health care financing. Our aim in the session is to draw out the links between universal health coverage, health systems strengthening, and health care financing. When we think about health care financing, it’s good to begin here. This is data from countries in Asia and in the Pacific. And it measures the contributions of the main sources of financing by percentage for each country. Ultimately, it’s patients and the population who pay for health care, but this is done in different ways with different outcomes for equity and for access to care. The five categories shown here make up, statistically at least, all the sources of health care financing. This is essential information.

In this graph, we can see a particular pattern. The countries of the Pacific fund health care predominantly through government budget, which, in this case, means both domestic taxation and donor funding. In Asia, clearly out-of-pocket spending is the main source of financing. And there are only a few countries that use social health insurance mechanisms in this region. The Millennium Development Goals helped us to achieve impressive gains in many health indicators. But they also had two unanticipated outcomes. They led to, firstly, too great a focus on vertical programs. And secondly, they led to inequity across income quintiles. The Sustainable Development Goals have been designed to address these two challenges.

The Sustainable Development Goals adopt the accepted WHO definition of universal coverage, that all people have the right to access all services, with good quality, and without financial hardship. The Universal Health Coverage 2030 Alliance sees health system strengthening, including health care financing, as the foundation for universal coverage in order to achieve the Sustainable Development Goals for health. This is in contrast to the MDG’s, which, as we said before, encouraged a vertical programs approach. The new approach is decidedly based on health system strengthening. The UHC2030 Alliance proposes this approach to health system strengthening. To achieve the five key elements, which are noted here, required of the health system, it’s necessary to manage governance, health financing, and service delivery.

If those five elements are achieved, then universal coverage is likely to be achieved also. Clearly population coverage, including access for all, service provision, including quality of care, and the absence of financial risk are all implied in the five goals. And they’re illustrated, here, in the three dimensions of the cube. So within the health system, on the path to universal coverage, we can ask, using this particular diagram, who is not covered. And we can find those populations and decide how we approach that issue. What services are not included, and why would that be the case? And how do we expand the services that are included? Is the quality of care too poor according to patient needs?

And just how much are patients asked to pay at the point of care? Obviously, this means extending taxation-funded health care, extending insurance coverage, where that is appropriate, reducing cost sharing, and improving service delivery, both the quantity and the quality of service delivery. So let’s return to where we began. Remember, all payment for health care comes ultimately from people. The aim is to adopt the most equitable distribution of costs and to avoid financial risk from health care. Progressive measures of taxation (that is, according to income level) are generally the most effective and the most equitable form of financing for health care. Social health insurance is the government-sponsored scheme of pre-payment. That is, usually, funded through salary deductions from formally employed workers.

And this mechanism spreads risk across rich and poor, healthy and sick. There’s a pooling mechanism. Out-of-pocket payment is the least equitable form of financing, but, sometimes, it might be used, for example, to ration less widely needed services. Private and community forms of insurance generally have very limited coverage and are generally not particularly equitable, at least at the national level. Now, these different measures, taxation, social health insurance, out-of-pocket payment, and private coverage are experienced differently

in practise between: formal sector workers, who may enjoy social health insurance coverage through salary reductions; informal workers, who may or may not have access to pre-payment mechanisms– much more difficult to organise into a pre-payment system– and the poor, who almost always must be subsidised through taxation. Now, this illustrates the health care financing system. The fundamental relationship in service delivery is between the patient and the health care provider. The role of the financial intermediary is through taxation, through pre-payment, or in paying subsidies to achieve coverage, equity, and financial risk protection.

The role of government, the circle on the right-hand side, is to provide both tax-based funding and provide stewardship, that is, planning, regulation, provision of incentives to make the system work as a whole. Health financing policy, therefore, must concern itself with the allocation of resources, the incidence of financing (that is who pays the cost of care); must concern itself with government and insurance intermediary agencies; and it must concern itself with the services that are included in the benefit, or the service delivery package, that is provided and funded through the financial intermediary. That may be, for example, the government service. What services are provided? What are funded? What is free? What is not?

Or the package of services funded by an insurance agency, for example. Must consider the role of the health care provider, which is a matter subject to regulation and incentives. So these are the issues that define the role of health care financing and the new path to universal coverage as proposed by the 2030 Alliance.