0UTLINE ON HEALTH CARE FINANCING (HCF) AND NHIS
1. Funding mechanisms
2. Payment mechanisms
3. NHIS- National Health Insurance Scheme
LIST OF ABBREVIATIONS
DEFINITION OF TERMS
• Care: the provision of what is necessary for health, welfare, maintenance, and protection of someone or something
• Finance: Deals with resource allocation, management and acquisition
• Health: a state of physical, social and mental wellbeing and not merely the absence of disease
• Health care financing: mobilization of funds for health care, allocation of funds to the regions and population groups and for specific types of health care and the mechanisms for paying health care
• Insurance: a defined contribution linked to a defined package of benefits for a specific period of time
• Premium: the amount of money to be charged for a certain amount of insurance coverage
• Primary Health Care: essential health care based on practical, scientifically sound and socially acceptable methods and technology made universally acceptable to individuals and families in the community through their full participation and at a cost the community and country can afford to maintain at every stage of their development in the spirit of self reliance and self determination
• Tax: an involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government activity
This topic consists of 3 main terms
Understanding this concept forms the basis for link between these 3 words fully understanding the topic.
• “ health is wealth”
• In 2001 approximately 9 percent of global gross domestic product (GDP) was spent on health care worldwide
• seventy countries devote less than 10% of general government expenditure to health
• Health financing provides the resources and economic incentives for the operation of health systems and is a key determinant of health system performance in terms of equity, efficiency and health outcomes.
• It an essential ingredient in the growth and development of any nation. It provides the basis for the health of a nation and livelihood for health personnel.
• One of the major problems of PHC in Nigeria is poor financing (WHO, 2009)
• There are 3 basic functions of health financing
1. Collecting revenues
2. Pooling resources
3. Purchasing services
• Ensure that healthcare is affordable and of high quality
• Ensure that essential health care goods and services are adequately provided for
• Achieve equity and efficiency in the use of health care spending
• Mobilize resources for health care
• Ensure that money is spent wisely so that the MDGs could be achieved
• Ensure the payment for or purchase of health services is carried out in ways that are allocative and technically efficient
Whether or not resources are efficiently used depends on the following mechanisms:
• The Funding mechanisms (sources)
• The Payment mechanisms
The funding mechanisms could be:
• External sources
• Internal sources: these could also be
1. Public sources
2. Private sources
The government is usually responsible for the generation of public funds.
The public funds include the following:
• Social insurance
• General tax revenue
• Deficit financing
• Lotteries and betting
• Sales tax revenue (earmarked taxes)
1. GENERAL TAX REVENUE:
• This is basically income gained by governments through taxation
• Unallocated funds acquired through business and property taxation
• Used for a variety of activities as detrmined by the state or local governments.
• An advantage is that it is equitable but then health sector competes with others.
Voluntary payments made by individuals or employers and they include:
• Out of pocket payments
• Employer financed scheme
• Charity and voluntary contributions
• Private health insurance
• Community financing and self help
Out of pocket payments:
• Direct payments made by patients for medical services and they include:
1. Deductibles for doctor visits and prescription medications
2. User fees
3. Unofficial or informal payments
4. Payment for tests not available in health facility
Most common source of health care financing and is capable of causing households incur catastrophic expenditures.
• User fee was introduced by the Nigerian government under the Bamako Initiative in 1998 and it advocated for cost sharing and community participation to increase the sustainability and quality of health care.
• It may cause excessive spending, there is also no risk pooling and it is the least equitable. (Limwattananon, 2007)
Social Health Insurance:
• It is one of the possible organisational mechanisms for raising and pooling funds to finance health services
• It provides a pool of funds to cover the cost of health care and it also has a social equity function which eliminates barriers to obtaining health care services at the time of need especially for the vulnerable groups.
• A percentage of every individual’s wage is usually contributed. This is called premium.
• These contributions could be made:
2. By employers
3. By the government
• There are specified benefits by law.
Private Health Insurance:
• These is privately purchased insurance and it can be made by individuals or groups
• There is usually a high premium and it is expensive depending on the type of health plan purchased from the insurance company
• One of the main disadvantages is that it has complex regulations but an advantage is its ability to provide good comfortable health cover.
Community based health insurance:
• Families or family groups finance or co-finance costs of health services through locally based prepayment schemes
• Designed for individuals living in rural areas
• Increased amount of people brings increased dispute
• Decisions are reached at a slow pace most often
• the advantage is that the local control may bring more accountability and transparency
• Involves financial aid given to developing countries to support socioeconomic and health development
• Usually involves third world countries
• The various sources could be:
2. Public-private partnerships 3. private foundations
• Direct household payments
• Third party payments
1. Per diem: all inclusive rate for each day of hospital cost provided
2. Per admission: all inclusive flat rate for each hospital admission
3. Capitation- fixed fee paid to the provider for patient per month for each patient enrolled in practice
• Fee-for-service: charges made on itemized invoice.
• Contractual allowance: physicians normally bill on a fee for service basis but they actually take less than the billed amount. The discount that results is referred to as contractual allowance.
• Co-financing: predetermined percentage of health benefit cost is paid by the patient.
EXCLUSIONS FROM NHIS
Conditions and procedures excluded from the benefit of NHIS include:
PARTIAL EXCLUSIONS FROM
• Limwattanon S. Tangcharoensathien V Prakongsai P. (2007). Catastrophic and poverty impacts of healyh payments: results from national households in thailand. Bulletin of the World Health Organization. 85(8) 600-606.
This post was last modified on June 10, 2019 10:15 am