Lecture 8: Funding health systems internationally

Question 1

what are some observations about providing health care ?

Answer 1

• a wide variety of arrangements exist for financing and providing health care internationally
• there is often dissatisfaction with health care systems in terms of funding, access etc
• most countries have reformed or are in the process of reforming their systems

Question 2

what are the 5 main ways to fund health services?

Answer 2

• general tax
• hypothecated tax
• social insurance, sometimes, compulsory in law
• private medical insurance
• out-of-pocket payments

Question 3

what are the health care system types?

Answer 3

• PRIVATE markets in both funding and provision (mainly in the US)
• PUBLIC funding (from taxes) and provision
• SOCIAL insurance

Question 4

what is an example of a public health care system?

Answer 4

Beveridge

Question 5

which countries utilise the Beveridge public health care system?

Answer 5

UK
Denmark
Sweden
Ireland
New Zealand 
Spain

Question 6

what does the Beveridge system involve?

Answer 6

• general tax funding (separation of payments and health care use/risks)
• state provides most healthcare, especially secondary care (hospitals) and private providers (GPs)

Question 7

what are the advantages of public health care systems?

Answer 7

• vertically integrated systems (government funds and provides HC) which lead to low transactions costs
• ensure universal access to services regardless of ability to pay
• relatively low cost of raising revenue (tax system)
• tend to rein in health care spending, delivering strong cost containment
• protects individuals and households against catastrophic health care expenditure

Question 8

what are the disadvantages of public health care systems?

Answer 8

• incentive problems - provider technical inefficiency
• moral hazard- need to ration health care other than by price which leads to queues and waiting lists
• required big bureaucracy to determine what, how and who. How much to spend on each region, service type and particular patients
• high administrative costs
• the degree of individual choice tends to be relatively limited
• reliance on general tax financing can leave a health system vulnerable in time of economic and fiscal difficulties

Question 9

what is an example of social insurance systems?

Answer 9

Bismarck

Question 10

which countries utilise the bismarck system?

Answer 10

Germany 
Austria
France
Belgium
Netherlands
Switzerland 
Australia

Question 11

what does the Bismarck system involve?

Answer 11

• it is an income-based system. Usually a proportional tax split between employer and employee
• mandatory coverage - individuals cant opt out. they may also take out supplementary insurance
• funding is delivered through ‘tied’ (hypothecated) taxes (separation of payments and health care use/risks)
• could be both private and public providers paid by the same public fund

Question 12

what are the advantages of social insurance systems?

Answer 12

• protects health care funding from political factors (might be easier to increase premiums than increase tax)
• patients tend to have a greater choice of providers
• provides a safety net against the unpredictable tax finance: tax revenues rise and fall in line with the economy
• access to health services is typically universal and is not based on ability to pay

Question 13

what are the disadvantages of social insurance systems?

Answer 13

• health care funding is not protected from economic cycles
• contributions from non earners and any deficits are usually funded from general taxation
• potential for cost shifting by employers (higher prices for consumers or lower wages for workers)
• moral hazard - rationing health care with coverage and copayments
• takes longer to attain universal health coverage
• susceptible to “patients shopping”, increasing demand without increasing benefit

Question 14

what is involved in private or voluntary health insurance systems?

Answer 14

• example of this system in the the US
• individuals are required to arrange their own health insurance coverage
• the poor and the old are provided insurance by the government
• rationing can occur through deductibles, copayments, maximum claims, exclusions

Question 15

what are the advantages of private or voluntary health insurance systems?

Answer 15

• choice, variety, innovation
• not cash-limited: system is responsive to consumers willingness and ability to pau
• every aspect of care costs are made more explicit
• weighting of premiums according to use means there is a deterrent effect on demand

Question 16

what are the disadvantages of private or voluntary health insurance systems?

Answer 16

• “paradox of excess and deprivation”: unequal access
• most in need of insurance can’t afford it (poor, sick)
• big regional variations
• not all the money that is paid goes on health care - profit motive
• prior approval required for spending, even in emergency situations
• despite high spending, little evidence of better health outcomes
• high administration costs

Question 17

what are some issues surrounding private insurance systems?

Answer 17

• spend too much
• health care price inflation
• both of the above are increasing due to richer people, ageing populations and expanding range of health care available
• zero coverage for many people

Question 18

which system is the best?

Answer 18

the systems have different strengths and weaknesses

• an optimal system would be a combination of both public health insurance and provision, with room to let private interests participate in specific areas
• figuring out where these are and how to manage competition is a challenge
• financial balance is essential for all health organisations