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Health financing


The way a country finances its health care can have a major bearing on the access to health care enjoyed by the population, particularly the poor. Our new programme of work will address a range of current issues and challenges in health financing.

The issue
National health policies often set out a strategic goal of ensuring equal access to essential health services for all, on the basis of need and irrespective of ability to pay. In practice, they rarely deliver.

Part of this is due to the sheer lack of resources. In a typical low income country, where only $3 - $5 of public funds per head is available for the health sector, ambitious goals are likely to be unrealistic, no matter how well resources are allocated and used. In addition, there is often significant inefficiency and inequity in both allocation and use of resources. Most resources go to urban based secondary and tertiary facilities which primarily benefit the better off, whilst primary care, which is potentially far more cost effective as well as more pro poor, remains largely neglected.

This results from an interplay of demand and supply side factors. On the supply side it is important to ensure that essential services are adequately financed and delivered. On the demand side it is important to reduce financial barriers by making sure that services are delivered in ways which are affordable to all. Attention also needs to be paid to all stages of the financing chain including:

  • funding: how revenues are raised - from general taxation, indirect taxation, social insurance, or out of pocket expenditure;
  • allocation: how these resources are allocated and used;
  • payment of providers: the way that providers are reimbursed for delivering services – through salary, fee for service, capitation, diagnostic related groups, global budgets etc.


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