Health Care Funding Systems - Coursework Example

HEALTH CARE FUNDING SYSTEMS College Introduction Health care system involves the organization of s, people and the resources that are used to ensure the best delivery of health care services to a particular population the society. Different countries in the world have different types of health care systems. This depends on the organizational structures and the historical definitions that these nations have when it comes to health issues. The main objective of these health systems is the provision of good health to the entire population by ensuring that financial contributions are fair to everyone in the population.in terms of funding, many health care systems are funded differently. This may depend on many factors that the nations hold but the most influencing factor is the economic state of the nation. Health care systems in developing countries are funded differently from the ones from the developed countries. This is because of the difference in the economies between these two groups of countries. Some of the ways in which health care systems are funded include taxation methods, use of social insurance, out of pocket payments, private insurances and charity donations. The low income countries are still using the traditional funding methods although some are using non-traditional methods like public-private partnerships and the micro-contributions. All these methods have similar and different approaches. They also have different advantages and weaknesses. This paper will place emphasis on similarities and differences on the taxation approach and the social health insurance method of health care funding system. These two methods have different approaches in funding health care systems. They have many advantages that make them widely used approaches in health care system funding. Despite these positive effects, they also have some weaknesses that render them inappropriate methods (Irvine, 2002, p.24). Main body Social health insurance is one of the approaches in health care funding. This method has its origin in Germany where it became effective in nineteenth century. When this method was first used, the government did not have any intervention (Whitaker, 1999, pp.37). Large firms were brought into existence due to the industrialization and this made people to come up with trade unions. Workers in those trade unions organized contributed sickness funds that enabled them access better health services. This encouraged the other workers and the number of those who were contributing on the sickness funds increased. As the model increased, people were provided with health insurance which was mainly controlled by the workers. The management of this health insurance was under the employers. The workers contributed on these health insurances based on their income from their work. In Germany, this health insurance improved and territorial funds were introduced. These funds were used to provide health insurance to the workers who could not benefit from the money they earned from their jobs. This gave the rise to the current improvement in health insurance in Germany (Wagstaff, 2009, p.24). Social health insurance has different features and different ways in which it operates. In social health insurance, the people involved are required to pay regular contribution from their monthly incomes. These regular contributions are called sickness funds. They are used as the major body of management in social health insurance (Whitaker, 1999, pp.38). There are other features that are associated with social health insurance funds although these features are not applicable in all counties. In some countries, social health insurance has been made compulsory for the larger population. In the past, this insurance also covered employees from the bigger firms but currently, it has been used to cover employees from smaller firms and those who are self-employed. This social health insurance has been made mandatory in many countries but Netherlands exempts those who have high incomes (Whitaker, 1999, pp.41). In some countries, the government pays sickness funds for those who are not employed. In these countries, some people depend on the government support only since they cannot raise money to pay social health insurance. This ensures that all people are able to access health services in the country. Furthermore, both employees and the employers are required to make contributions on the sickness funds. They are given full responsibilities in controlling use of the funds (Irvine, 2002, p.41). Different countries in Europe have different approaches to the social health insurance mainly in terms of the people who are supposed to be insured. In the past, social health insurance only focused on the working population in the society. The coverage of the insurance later expanded to the non-working members of the society. Some of the countries that have managed to cover the all population with this social health insurance include Swaziland, France and Belgium. In Germany, 74% of the population is insured with the remaining population are those who earn large amounts of money. The main reason for is because the highly aid population can afford health bills and services easily. In counties like Germany, France, Netherlands and Luxemburg, people insured pay their contributions irrespective of the sickness funds. In Germany, employment status does not change the contributions made by the insured people (Wilkinson, 2006, p.53). Health care systems can also be financed through taxation. This approach is referred to as taxation systems in the health care. In this health financial system, expenditure is catered through the tax payments. These taxes are paid by people who are employed by the government. The private sectors also pay taxes to the government. The tax paid by a citizen of a particular country is directly proportional to his or her monthly income. People who earn a lot of money also pay huge amounts of tax. Taxes are known to be heterogeneous due to the different sources used to get the taxes. Taxes can be national of local, direct or indirect and general of hypothecated. All these types of taxes vary in term of efficiency and equity. Different countries also apply different sources of taxes in their health care systems. France and Italy use the hypothecated source of tax in their health systems. Local or regional taxes are applied in countries like Norway, Sweden, Finland, Denmark and Bulgaria. United Kingdom, Portugal and Albania use the national tax in their health care systems. Taxes play some roles in other health care funding systems. However, there are many similarities between the uses of taxation funds in health care systems and the use of social health insurance (Wagstaff, 2009, p.14). Taxes also play a role in social health insurance. This opposes the assumption taken by many people that social health insurance depend only on the contributions made by the people involved. Some countries like Switzerland and Australia fund the hospitals directly by the use of taxation money and a small proportion of the social health insurance enjoys a little of tax expenditure. In Netherlands, the social health insurance receives some fund subsidies from the taxation made by the government. Counties like Germany and Austria do not give subsidies to the sickness funds through the countries’ taxation (Wagstaff, 2009, p.25). Tax revenue has been used to improve the services of social health insurance. The funds collected through taxation can be used to cater from the population that cannot contribute on the sickness funds. The government will pay for this larger population that is not employed. This helps in preventing coverage fragmentation. However, the non-working population can access the same health services as the working population working making any contribution. This ensures that maintenance of solidary in the entire population. Furthermore, the similarity that social health insurance has with the taxation system is that taxation covers the insurance funds deficit. This ensures that insurers do not become insolvent due to lack of enough money to cater for the large population that makes contributions. As the government pay for money to the insurance, the year contribution of the individuals reduces and this will reduce the labor cost (Wagstaff, 2009, p.27). Both social health insurance and the tax financed systems states that the people who need health services get them. Services are available for the population every time they need these services. The ability of the people to pay taxes and to contribute on the sickness funds grants them right to access medical services (Ross, 1999, p.63). Models of taxation system and social health insurance are similar but they also differ in their ways of practice. One of the differences comes in through ways in which funds are collected and managed. In social health insurance, funds are collective from the people who are working. Management of these funds is in control of both the employer and the employee. In terms of taxation systems, the government is control and management of funds. The government allocates the funds to the various hospitals around the country (Burman, 2003, p.68). Access to the health care in social health insurance and in taxation system varies. In social health insurance, one accesses health care depending on the contributions one gives to the sickness funds. There is a contract between the member and the insurer. The member is treated depending on the contributions he or she makes. Not is not the case as taxation system is concern all people are treated equal by the government. All people receive equal services despite the hospitals type of location of the hospital attended. Furthermore, in social health insurance, revenue is determined by the contributions made by the members. This differs with the taxation system in which revenue is determined by the political predilections. This means that social health insurance has minimal control by politics. Social health insurance has strengths that have made one of the best methods used in health care funding system. These strengths are rated on the basis of efficiency and fairness to the people involved. One of the strengths of social health insurance is that it is portable. This means that when one change from one job to another, the insurance will not change and the individual contributions will still be reflected in the new job. The person will be covered by the insurance despite the changing the occupation. Additionally, social health insurance has larger risk pool that the private insurance. Social health insurance encourages social solidarity. In country like Germany, the government caters for the poor by paying them some contributions to the sickness funds. This ensures that the unemployed populations are also allowed to access medical services like the employed ones despite their minimal contributions. Patients’ attendance in Germany is very high. The number of physicians is very large the waiting lists are rarely found in Germany health centers. In addition, individuals in social health insurance may choose their insurers based on the price that the insurers state. The patients have wide range of specialist that they can choose from. This has increased patients’ satisfactions in Germany thus encouraging the increase in insurance premiums in this country (Hagist, Holldorf & Pütz, 2005, p.98). Social health insurance has some weaknesses. Through the contributions made by the employees, the labor cost has gone high. This causes the country’s competitiveness to go down as well as the economy. In some countries, accessing social health insurance systems requires one to be employed somewhere. This means those people who are not employed cannot access these insurance services. The elderly are also denied these services. There are some other factors which have hindered this health care funding system. One of the factors includes the increase in the self-employment sector. This has reduced the amount of contributions made by the people employed by the government since self-employment does not encourage this insurance to the health system. People tend to prefer the private insurance (Hagist, Holldorf & Pütz, 2005, p.102). Tax financed system also have many weaknesses. The taxes imposed to the individual’s causes much confusion. The employed population cannot know the exact amount of money they are paying as taxes. The amount they are taxed do not correspond to the amount they use in health services. Most of them use smaller amount in health services yet they pay huge amounts from their incomes. The employed population also does not know the exact amount they pay for the poor in their taxes. Therefore, this system is complicating since it is difficult to know the amount of money tax payers are paying (Burman, 2003, p.66). Another weakness of taxation is that everyone in the society benefits from the general taxations. According to the general taxations, not all people pay taxes yet they benefit from them. All taxes are controlled by the government and are used fairly for all people in the government. Some people pay a lot of taxes to the government but when it comes to the health services they pay for private health insurance. This is because they depend more on the private insurance than on the social health insurance. Private insurance are more reliable than the social health insurance. Therefore, the richer population opts for the private insurance but they still pay taxes to the government. These taxes will benefit the poor in the society. Some diseases are very hard to be treated. Diseases like cancer require very expensive medications. This means that social health insurance cannot cater for the expenses. Medical managers suggest that these social health insurances cannot be used to pay for expensive diseases like cancer. Private insurance is preferred from the social health insurance. This means that individuals are treated depending on the money they contribute to the private insurance. Conclusion Social health insurance and the tax financed systems in health care have been used widely in most countries in the world. Some countries prefer one of the funding systems depending on the way they can manage it. Social health insurance depends on the contributions made by the employed population. In some countries, for example Germany, the poor are catered for by the government. This encourages social solidarity in the country. Tax financed system have also been used. This involves funding the health care system using the revenue collected by the government. Revenue is collected from the employed population. The revenue collected is then used for the entire population of the country. It hard to identify the amount of revenue the government is using in the health systems. Social health insurance and tax financed system are related in some ways. Revenue from the taxation can be used to subsidies the amount of contributions made by individuals. 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