Healthcare Financing

Health is a state of physical, social, mental, and spiritual well-being, and not a mere absence of disease or ailment. It must be culturally acceptable, accessible, affordable, and available to all.

Health Care Financing is the responsibility of the entire population. Different countries have different ways of meeting the health needs of their populace.

Definition

3 concepts: Mobilization of funds, Allocation of funds, Payment mechanisms for healthcare services.

Health Care Financing (HCF) is the pooling and allocation of funds for the provision of healthcare services and determination of payments for the services rendered.

• Financing healthcare services including emergency care
• To alleviate poverty
• Occurrence of ill-health is not predictable almost always
• Ill-health does not consider economic status
• There is limited resources for families, individuals, organizations and government
• The need for efficient and effective management of the limited resources
• Health is wealth
• SDG- 3- to provide good health and wellbeing to all (UHC)

• Mobilization of adequate resources for healthcare services
• Equity and efficiency
• Affordable and effective healthcare services
• Adequately available and accessible healthcare services
• Accountability of the resources mobilized and allocated
• More than one source of HCF is employed

• Government (public budget)—Tax, loans, grants, mineral resources.
• WHO-15% of budget
• Abuja Declaration (2001)-15%
• Nigeria(2023)-5.75%
• 2024-4.8%
• Donations
• Out of pocket
• Retainership
• Private Health Insurance
• Social Health Insurance

Donations

• Grants, allocations, or gifts.
• Donors:
• Developmental partners
• Non-governmental organizations
• Individuals’ foundations (philanthropists)
• WHO, UNICEF, USAIDS, world banks, AfDB, religious bodies, etc.
• Challenges:
• Donor fatigue
• Corruption-misuse, embezzlement, etc.
• Poor coordination
• Poor accountability

Out-of-pocket

• Funding of healthcare from individual or household purses.
• 40% of total HCF is accepted by WHO.
• Challenges:
• Increases poverty
• Difficulty in accessing quality healthcare services
• 70-90% of total HCF

Retainership

Arrangement between an organization and a healthcare provider whereby the employees can access healthcare service and the organization pays the service provider over the agreed period of time. Private and Social health insurance are replacing this.

Private Health Insurance

• Premiums are deposited to insurance company periodically to cover for health problems.
• Individual or employer-based.
• The premiums paid depend on the age, sex, occupation type, existing morbidities, etc.

Challenges include being profit-oriented, where the amount of premium determines the amount of healthcare services to be enjoyed. Costs and risks are borne by the individuals, and the employer may pay all the premium or share it with the employee.

Social Health Insurance

• A social security arrangement based on the concept of charity and equity.
• Common pool to provide financial protection to participants against health problems.
• The costs and the risks are shared among the contributors.
• The contribution is based on ability but the enjoyment of the services is based on needs.
• There is a regulated benefits package based on equity.
• It is not profit-oriented.
• It frees up funds for health from the government budget.

• HCF remains the bedrock of an effective healthcare system.
• Usually, more than one source is required to finance healthcare in the country.
• Advocacy should tend towards making adequate funds available to cater for all (UHC).