Understanding Health Systems Finance - Essay Example

? School of Health and Bioscience Heath Studies BSc (Hons) Health Services Management HS3105: Understanding Health Systems Finance Critical Discussion of Finance Methods Introduction Health is one component in life that we cannot do without and according to Gottrett and Schieber (2006), they explain that “Health has been widely recognised currently as a basic human right, and the urgency of some global health issues has pushed global health policy to the top of international agenda.” Furthermore they clarify that with the current trend of globalization in comes the flow if ideas, capital and the number of humanity across which has quite a huge impact and results when it comes to the treatment of diseases. This means that with the high number of potential epidemics there is a necessity to create a good public health and also ensure that the public health policy is as much a national security issue as international policy issue it can be. The Millennium Development Goals also supports this initiative as the major component when it comes to the achievement of the goals includes health which is part of the aspects that will project the MDGs (Millennium Development Goals). It is with this in mind that this essay will be tackling the aspect of healthcare and the policies put in place for the healthcare funding. The paper will look at the healthcare system in general and how the funding has been set up in order to maintain the healthcare policies (Sussex, & Farrar, 2009). The emphasis of the paper is to try and understand how the sustainable healthcare funding works whether it is appropriate or not and in addition I will look at the different types and methods of healthcare funding and how they impact the major stakeholders i.e. the patients, practitioners and even the managers (Westmoreland, & Watson, 2006). Finally for the healthcare financial system to be understood, the techniques used by the stakeholders will come in handy therefore I will tackle the perspective of the healthcare enabling the managers to maintain a good service of the highest quality. I have split the paper into different sections under which each segment for the healthcare systems will be tackled. The first one is the introduction to set the motion rolling, thereafter I will look at the healthcare systems and how there are different methods of funding. I will critically analyse the two approaches I deem fit for the healthcare funding with each having the strength and the weakness and how viable they are there after I will include the discussion of the applications of the healthcare funding we have looked at. Finally I will conclude the essay by reviewing the whole essay and also giving my own opinions of the said topic. All the facts will be supported by relevant research materials from other like minded authors and academicians. Healthcare Schieber et al. (2006) explains that “… as a result of the international focus on poverty reduction, the HIV/ AIDS pandemic and the MDGs (Millennium Development Goals), the international health financing policy has evolved over the past decade from defining a basic package of cost-effective health services to figuring out how to finance and deliver those services equitably and efficiently, to recognizing the need to scale up health systems to meet basic service needs and achieve MDGs, which will require amounts of DAH (development Assistance for Health) for poor countries.” This means that the health sector has played a major role in every other factor concerning the development of countries and for the achievement of the MDGs, this is especially an area of focus in the Low and Middle Income Countries where majority of their GDP (Gross Domestic Product) has been spent in the health care system and therefore it is prudent for policies to be set up in many countries in order to help improve the health care system as this will imply money saved to develop other important areas for the achievement of MDGs and also to reduce the preventable diseases easily (Navarro, 2010). The health care system varies from one region to another for example in England the healthcare is mostly under the provision of the England’s public health service which is the National Health Service which gives provisional healthcare to the residents at no cost but the billing will be mainly made form the taxation (Nettleman, & Yammi, 2003) . Since health is a delegated issue there are comparisons in terms of healthcare from one place to another although a point to note is that the public system in most countries it is the most dominant as compared to the private health care system (Rosenbaum, et al. 1998). Health Care Funding The development of health care funding will mostly depend on the people and also the capital set aside to build the system (Felton, Cashin, & Brown, 2010). The money and capital set aside will have many uses in the end the results will have to be beneficial to the person and also the parties involved in the implementing the policies on healthcare. The funds and financial resources greatly help in getting the drugs and also paying off the staff working in various healthcare sectors their wages. Mossalios et al (2002) said: “Sustainable health care systems are built on reliable access to human, capital and consumable resources. Securing these inputs requires financial resources to pay for investment in buildings and equipment, to compensate health service staff for their time and to pay for drugs and other consumables, how these financial resources are generated and managed- the process of collecting revenue and pooling funds- raises important issues for policy-makers and planners faced with the challenge of designing systems of funding that meet specific objectives related to social policy, politics and economics.” When it comes to the health care financing the majority of the countries feel the strain as most resources found in the country are minimal while at the same time the expenditure is on the rise as a solution most of the policy makers have either three solutions the first one being controlling the expenditure or the costs, the second one the policy makers will think of raising the funds set aside for health or in the last solution they will increase both the expenditures and also increase the funding on health. The mode of spending in the health sector has made most countries revise how they finance and organize their health care. According to Mossalios and Le Grand (1997), since 1970’s the cost containment has been the main topic on health policy deliberations in developed countries. When there is a necessity for a balanced budget it implies that the revenue will have to be sufficiently generated. Many countries are now adopting the funding of health care on a sustainable level since they are avoiding borrowing money on a large-scale as it is not a good economic policy (Leroy, et al. 2007). Financing of health care; offers a leeway for the resources and the economical spur for the operation of the said health system. This also means that the health care is a major factor when it comes to the performance of the health system in relation to the effectiveness, impartiality and health outcomes. According to Murray and Frenk (2000) the functions of the health systems can be divided into two broad categories and that is financing and provision. The two categories can further be analytically be looked at in terms of the first category is divided into three areas and that is revenue collection, fund pooling and purchasing. This will be the area that I will be looking at. The second major function of health care system is further split into two factions that is healthcare offered as a personal health service and another offered as a non-personal health service. Revenue collection has the benefit of getting money raised from households, external sources of revenue and even businesses. This money will basically be used in the health care system. Musgrove (1996) said that the governments use a myriad of financial and non-financial systems to help perform their purpose which might include provision of services directly, financing, standardising, authorizing the provision of service and giving information. Quite a number of literary articles have been specifically written to help in the numerous resources that facilitate the financing of health services and the economical impact in using these said sources in relation to the effectiveness, equity, sustainability among others (Schieber, 1997, Tanzi & Zee, 2000, Tait 2001). One of the major limiting factor for Revenue collection as a source of healthcare funding is that different economies vary in terms of their financing systems and the way they mobilize the resources in order to facilitate the healthcare. This at the end of the day creates an impression whereby the need for the wealthy to be taxed is high and quite difficult as the economies try to create an equitable economy but the wealthy society have difficulty in getting taxed highly. This can be summarized by Tanzi & Zee (2000) who say that “tax policy is often the art of the possible rather than the pursuit of the optimal.” The other factor that is greatly limiting is that in most of the healthcare systems there is the user fee that is charged to the service provided for the patients. This has created an impression to the poor that the healthcare system is quite unaffordable even if it is cheap. Furthermore the administrative cost of facilitating the collection of this fee is quite expensive as compared to the revenues generated and as per that the United Nations Millennium Project (2005) has been on the campaign to abolish the usage of user fee especially in the Lo-Middle Income Countries (LMICs), (Travis, et al. 2004) Another way that the healthcare system can be financed is through pooling or risk pooling. Pooling associates itself with the gradual accretion and revenue management in order for the ‘pool members’ have a shared communal health risks hence single members in the group get covered from enormous health expenses. One way is through prepayment where the members pay the costs in advance and the cost will be calculated on average and should any loss happens they will be compensated. Pooling together with prepayment permits the formation of insurance and in general enables the distribution of health spending among the spheres of economic levels between high to low income households. One advantage of pooling is that if managed correctly these revenues offers an equitable and efficient polling on health risks (Sasso, & Byck, 2010). While pooling guarantees that it is predictable and there is a potential in terms of redistribution of individual health risks across all the categories, the prepayment will offer a number of options for financing the risks equally and in an efficient manner across the income level of its members. One limiting factor on pooling is that by spreading the risks in different insurance schemes will not be enough to offer financial protection since it will possibly result in individuals with low incomes and with low risks in the insurance subsidizing the individuals with high income which translates to high risks in the insurance market. As with most LMICs the majority of the population will not be able to afford the insurance covers (Green, & Mercer, 2001). The role of the managers I this type of scheme will be crucial as they will be the ones in charge of ensuring the policy on this type of health care scheme is implemented (Lassila & Valkonen, 2004). Furthermore as stated earlier on the functions of health care systems under provision, personal health care will be highly marketable in this area therefore it will be prudent for the managers to tap in this segment of the healthcare funding (Self-Funding of Health Care Benefits 1998). The non- personal health care will not be left behind as compared to the revenue method, most of the society will get the treatment purely on the basis of subsidies in the economies whereas in pooling the market is wide open and thus creates an opportunity to be tapped like in the non- personal health purposes of health care funding. Conclusion The healthcare sector as a major component of the development goals is quite resourceful and therefore the health should be of top most priority (Segal, 1998). Different countries have already embraced the aspect of developing and implementing the health care policies that will enable reduce the mortality rate and provide cheap ways of treatment in order to produce a productive work force and enhance the country’s GDP. The governments offer their healthcare funding from the revenue collected from the society and this especially in Africa has its own challenges but the positive aspects are more beneficial, at the same time there are the other lot of people who prefer the healthcare funding to be done through pooling as it spreads the risks equitably and is more efficient when it comes to service delivery, the main limitation being that majority of population cannot afford the pooling unless it is offered on subsidy. I believe the healthcare financial system is untapped and it has the capability of realizing its full potential in the society of today. The key challenge the policy makers will face will be ensuring the access of health services is easy and financial cover is available when a new health policy in the world is provided. References "Self-Funding of Health Care Benefits, 4th ed", 1998, Journal of the American Society of CLU & ChFC, vol. 52, no. 5, pp. 97-97. Felton, M. C., Cashin, C. E., & Brown, T. T. (2010). What does it take? california county funding requests for recovery-oriented full service partnerships under the mental health services act. Community Mental Health Journal, 46(5), 441-51. Gottrett, P., Schrieber, G. (2006) Health Financing Revisited: A practitioners guide. Washington, The World Bank. Available at: http://siteresources.worldbank.org/INTHSD/Resources/topics/Health- Financing/HFRFull.pdf (Last accessed 14 Dec, 2012.) 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