Melitta Jakab

Effectiveness of community health financing in meeting the cost of illness

How to finance and provide health care for the more than 1.3 billion rural poor and informal sector workers in low- and middle-income countries is one of the greatest challenges facing the international development community. This article presents the main findings from an extensive survey of the literature of community financing arrangements, and selected experiences from the Asia and Africa regions. Most community financing schemes have evolved in the context of severe economic constraints, political instability, and lack of good governance. Micro-level household data analysis indicates that community financing improves access by rural and informal sector workers to needed heath care and provides them with some financial protection against the cost of illness. Macro-level cross-country analysis gives empirical support to the hypothesis that risk-sharing in health financing matters in terms of its impact on both the level and distribution of health, financial fairness and responsiveness indicators. The background research done for this article points to five key policies available to governments to improve the effectiveness and sustainability of existing community financing schemes. This includes: (a) increased and well-targeted subsidies to pay for the premiums of low-income populations; (b) insurance to protect against expenditure fluctuations and re-insurance to enlarge the effective size of small risk pools; (c) effective prevention and case management techniques to limit expenditure fluctuations; (d) technical support to strengthen the management capacity of local schemes; and (e) establishment and strengthening of links with the formal financing and provider networks.

Lessons from health financing reform in central and eastern Europe and the former Soviet Union.

Policy makers in the so-called transition countries, as in all countries, face the challenge of improving the performance of their health systems. These countries share a unique historical experience – the period and collapse of communist rule – and all embarked on an unprecedented social, political and economic transition that began at the end of the 1980s. Despite this shared history, differences emerged (or became more apparent) in the early years of transition. Most obviously, there are large economic differences between the countries, with the richest country, Slovenia, having an estimated purchasing power parity-adjusted per capita gross national income in 2008 of

From scheme to system: social health insurance funds and the transformation of health financing in Kyrgyzstan and Moldova

26,910 compared with that of

Health Care Financing for Rural and Low-Income Populations: The Role of Communities in Resource Mobilization and Risk Sharing

1860 in the poorest, Tajikistan (World Bank, 2009) (Table 1). The transition created particular challenges and opportunities for their health systems, in general, and for health financing systems, in particular. And indeed, most of the countries introduced either comprehensive or piecemeal reforms in a number of areas, including the introduction of compulsory health insurance (CHI) funds, changes in provider payment methods and changes in benefit packages and user charges. A recently completed edited volume (Kutzin et al., 2010) reviewed the experience of transition countries with two decades of health financing reform and synthesised lessons learnt to date, some of which may resonate for countries

Role of Communities in Resource Mobilization and Risk Sharing : A Synthesis Report

OBJECTIVE The aim of the paper is to bring evidence and lessons from two low- and middle-income countries (LMIs) of the former USSR into the global debate on health financing in poor countries. In particular, we analyze the introduction of social health insurance (SHI) in Kyrgyzstan and Moldova. To some extent, the intent of SHI introduction in these countries was similar to that in LMIs elsewhere: increase prepaid revenues for health and incorporate the entire population into the new system. But the approach taken to universality was different. In particular, the SHI fund in each country was used as the key instrument in a comprehensive reform of the health financing system, with the new revenues from payroll taxation used in an explicitly complementary manner to general budget revenues. From a functional perspective, the reforms in these countries involved not only the introduction of a new source of funds, but also the centralization of pooling, a shift from input- to output-based provider payment methods, specification of a benefit package, and greater autonomy for public sector health care providers. Hence, their reforms were not simply the introduction of an SHI scheme, but rather the use of an SHI fund as an instrument to transform the entire system of health financing. METHODOLOGY/APPROACH The study uses administrative and household data to demonstrate the impact of the reforms on regional inequality and household financial burden. FINDINGS The approach used in these two countries led to improved equity in the geographic distribution of government health spending, improved financial protection, and reduced informal payments. IMPLICATIONS FOR POLICY The comprehensive approach taken to reform in these two countries, and particularly the redirection of general budget revenues to the new SHI funds, explain much of the success that was achieved. This experience offers potentially useful lessons for LMIs elsewhere in the world, and for shifting the global debate away from what we see as a false dichotomy between SHI and general revenue-funded systems. By demonstrating that sources are not systems, these cases illustrate how, in particular by careful design of pooling and coverage arrangements, the introduction of SHI in an LMI context can avoid the fragmentation problem often associated with this reform instrument.

Rich-Poor Differences in Health Care Financing

A synthesis background report to Commission on Macroeconomics and Health.

Social inclusion and financial protection through community financing: initial results from five household surveys

Most community finance schemes have evolved in the context of severe economic constraints, political instability, and lack of good governance. Usually government taxation capacity is weak, formal mechanisms of social protection for vulnerable populations absent, and government oversight of the informal health sector lacking. In this context of extreme public sector failure, community involvement in financing health care provides a critical though insufficient first step in the long march toward improved access to health care by the poor and social protection against the cost of illness. It should be regarded as a complement to-not as a substitute for-strong government involvement in health care financing and risk management related to the cost of illness. Based on an extensive survey of the literature, the main strengths of community financing schemes are the extent of outreach penetration achieved through community participation, their contribution to financial protection against illness, and increase in access to health care by low-income rural and informal sector workers. Their main weaknesses are the low volume of revenues that can be mobilized from poor communities, the frequent exclusion of the very poorest from participation in such schemes without some form of subsidy, the small size of the risk pool, the limited management capacity that exists in rural and low-income contexts, and their isolation from the more comprehensive benefits that are often available through more formal health financing mechanisms and provider networks. The authors conclude by proposing concrete public policy measures that governments can introduce to strengthen and improve the effectiveness of community involvement in health care financing. This includes: (a) increased and well-targeted subsidies to pay for the premiums of low-income populations; (b) use of insurance to protect against expenditure fluctuations and use of reinsurance to enlarge the effective size of small risk pools; (c) use of effective prevention and case management techniques to limit expenditure fluctuations; (d) technical support to strengthen the management capacity of local schemes; and (e) establishment and strengthening of links with the formal financing and provider networks.