Health Insurance Flashcards
What is economics?
Science about how best limited resources can be utilized to satisfy unlimited need on the basis of individuals’ or society’s own choice.
Economic levels and average health expenditure as % GDP?
High income - 11.9%
Upper middle income - 6%
Lower middle income - 4.5%
Low income - 4.5%
What is health economics?
‘The science concerned with issues relating to the
allocation of scarce resources to improve health’
Economics is the science of scarcity. The application of health
economics reflects a universal desire to obtain maximum
value for money by ensuring not just the clinical effectiveness,
but also the cost-effectiveness of healthcare provision’
Define universal health coverage
Universal health coverage (UHC) means that all people have access to the full range of quality health services they need, when and where they need them, without financial hardship. It covers the full continuum of essential health services, from health promotion to prevention, treatment, rehabilitation and palliative care.
- challenging to achieve
- universal health care does not equate to universal health coverage
What are the indicators for SDG 3 target 8 (Achieve universal health coverage)?
1) Coverage of essential health services
2) Proportion of a country’s population with large household expenditure on health as a share of household total consumption or income
Health access vs health coverage
Universal health coverage is attained when people actually obtain the health services they need and benefit from financial risk protection. Access, on the other hand, is the opportunity or ability to do both of these things.
Illustration of universal health coverage - 3 dimensions to consider when moving towards universal health coverage
(illustration of a cube which represents CURRENT POOLED FUNDS) - the cube can expand/grow in volume in one of three directions/dimensions:
- extend to non-covered (Population; who is covered?)
- reduce cost sharing and fees (Direct costs; proportion of the costs covered)
- include other services (Services: which services are covered)
(In summary, growing the volume of ‘current pooled funds’ can be done towards one of the dimensions above)
*quality missing from the model!
Features of quality health care
- safe
- effective
- people-centred
- timely
Universal health coverage - quality concern
“What good does it do to offer free maternal care and have a high proportion of babies delivered in health facilities if the quality of care is sub-standard or even dangerous?”
- you could provide all the services, for everyone at an affordable price and have good utilisation, but that is not worth much without QUALITY
Benefits of high quality healthcare:
- equitable
- efficient
- integrated (good coordination across services)
Catastrophic health expenditure
Expenditures that severely disrupt household living standards are catastrophic.
Catastrophic payments is approximated by those in excess of a substantial fraction of the household budget.
Spending a large fraction of household resources on health care can threaten living standards either in the short term, as current consumption of other goods and services must be sacrificed, or in the long term, as assets are divested, savings depleted or debt accumulated.
One conception of fairness in health finance is that households should be protected against such catastrophic medical expenses
(can be calculated as a proportion of household income or household expenditure, but expenditure usually preferred)
Catastrophic health spending is defined as out-of-pocket spending exceeding:
- 10% of total household expenditure
- 40% of non-food household expenditure
Why OOP is a problem?
- Unmet need of health and medical care (people don’t present themselves to the healthcare system because they can’t afford it)
- Catastrophic health expenditure
- Economic impoverishment/Poverty
The catastrophic head count
The catastrophic head count (HC) refers to the percentage of households incurring catastrophic payments.
Poverty gap
Poverty gap at $1.90 a day is the mean shortfall in income or consumption from thepovertyline$1.90 a day(counting the nonpoor as having zero shortfall), expressed as a percentage of thepovertyline. This measurement is done also at $3.20 and $ 5.50.
National poverty headcount ratio
Nationalpoverty headcount ratiois thepercentageof the population living below the nationalpovertylines. National estimates are based on population-weighted subgroup estimates from household surveys.
Purchasing power parity
Purchasing power parity (PPP) is a popular macroeconomic analysis metric used to compare economic productivity and standards of living between countries.
PPP involves an economic theory that compares different countries’ currencies through a “basket of goods” approach. That is, PPP is the exchange rate at which one nation’s currency would be converted into another to purchase the same and same amounts of a large group of products.
According to this concept, two currencies are in equilibrium—their currencies are at par—when a basket of goods is priced the same in both countries, taking into account the exchange rates.
Increase in poverty gap due to household health expenditures
If out-of-pocket payments for healthcare is completely non-discretionary (not subject to choice) and total household resources are fixed, the difference between two estimates (household consumption expenditure with and without OOP payments for healthcare) would correspond to poverty due to health payments.
Pen’s Parade/The income parade
Pen’s Parade or The Income Parade is a concept described in a 1971 book published by Dutch economist Jan Pen describing income distribution. The parade is defined as a succession of every person in the economy, with their height proportional to their income, and ordered from lowest to greatest.
The parade intersect with the poverty line.
Y axis can show the healthcare consumption as multiple of the poverty line (showing that even people making multiples of the poverty treshold can fall below the poverty line after paying for healthcare (catastrophic health expenditure can send people below the poverty line) & it is also evident that catastrophic health expenditure can increase the poverty gap for those already below the line
What does healthcare financing address
- The mechanisms for meeting the expenditure for accessing healthcare
- It includes “collection of revenue” and “purchasing of healthcare”
Economics of healthcare financing - Efficiency
Achieving efficiency is about comparing the costs (or resources) and benefits (or well-being produced) ensuring that resources are allocated in such a way so that gain to the society can be maximized.
Economics of healthcare financing - Equity
Principle of being fair to all, with reference to a defined and recognized set of values.
Examples of non-personal health services
Public health, prevention, sanitation
Personal vs non personal health services
Personal health services were seen as those “consumed directly by an individual, whether they are preventive, diagnostic, therapeutic or rehabilitative, and whether they generate externalities or not”, whereas non-personal health services were defined as referring to “actions that are applied either to collectivities (for example, mass health education) or to the non-human components of the environment (for example, basic sanitation)”.
Functions of health care system
Financing:
- Revenue collection
-Fund pooling
- Purchasing
Provision:
- personal health services
- non-personal health services
Financing equation
TF + SI + UC + PI = P x Q
TF = Sum of taxation
SI = Social insurance contributions
UC = Out of pocket and user charges
PI = Insurance premium (voluntary or private)
P = Price of the service
Q = Quantity of the service
(left side of the equation = revenue collection!!)
Direct vs indirect taxation
A direct tax is one that the taxpayer pays directly to the government. These taxes cannot be shifted to any other person or group. An indirect tax is one that can be passed on-or shifted-to another person or group by the person or business that owes it.
Examples of indirect taxes includesales tax, entertainment tax, excise duty, etc. These are levied on the sellers of goods or the providers of service, where it is passed on to the end consumer in the form ofservice tax, excise duty, entertainment tax, custom duty etc.
Examples:
Direct - income tax
Indirect - tobacco tax
Medical savings account
Amedical savings account(MSA) is an account into which tax-deferred amounts from income can be deposited. The amounts are often called contributions and may be made by a worker, an employer, or both, depending on a country’s laws
(e.g. in Singapore)
Funding strategy and scope for pooling - Tax
Yes
Fund pooling
Fund pooling is defined as the ’accumulation of prepaid health care revenues on behalf of a population’.
Importance: It facilitates the pooling of financial risk across the
population.
(controls for risk; helps pool the financial risk across the population, so that one person does need to pay for the entire cost of treatment when they get ill)
Funding strategy and scope for pooling - Social security contribution
Yes
Funding strategy and scope for pooling - Private health insurance premium
Yes (limited; only some individuals will enrol to private insurance)
