Page 40 - 20211214_OHKF_Health_Finance_Research_Report_E (1)

Key component #1: Revenue raising

Revenue raising addresses how funds are raised, through taxation both direct and indirect,
compulsory or voluntary prepaid insurance and community schemes, direct out-of-pocket
payment by patients, and/or external aid.

The 2019 Renewed Commitment during High-Level Meeting in New York with the UN General
Assembly called for countries to move towards a predominant reliance on compulsory,
public funding sources. This goal will require that countries develop capabilities of their
health financing institutions to sustain appropriate domestic financing of health and to
increase their efficiency by increasing public spending on PHC. Specifically, the WHO calls
for increasing PHC spending by 1% GDP. Doing so would have varying effects on
countries within different income categories, as proportional increases in PHC spending in
high income countries will lead to much higher PHC spending per capita than in lower
income countries. This increase in PHC spending can improve the quality of PHC services
and make PHC more accessible through subsidised services.

Of note, efforts to “scale-up” a health system centred on increased spending have not
consistently ensured that the most vulnerable populations are able to access care within the
public sector. The WHO has also recognised that simply injecting additional funds
into a health budget—revenue raising—is often insufficient for making
meaningful progress in attaining UHC, which requires consideration of how funds are pooled
and how they are allocated (WHO, 2019a).

Key component #2: Pooling of funds
The pooling of funds addresses how prepaid funds are accumulated for use by some or the
entire population. Pooling ensures that taxes, premiums and foreign assistance used to
finance health services, termed “pre-paid revenues”, will be shared by a community. As a
result, the risk is spread and the financial burden to an individual paying for healthcare is
reduced, and any person who needs medical care would not be subject to the entire
payment alone through high OOPs or face financial catastrophe (WHO, 2010b).

However, pooling fragmentation occurs when there are barriers to the redistribution and
efficient use of these pre-paid funds. It can be illustrated by a split in collected funds across
different budgets, called “pools”, reducing the amount accessible to individuals (WHO,
2010b, 2015a). As a result, patients with less financial capacity will face higher financial risk
from reduced funding in their pool than more financially capable patients, increasing
disparities in healthcare access. It is important that pooling fragmentation is
reduced, so that each budget will be larger, protecting individuals from
high OOP payments or reducing the required contributions to be made by
patients, resulting in a more equitable redistribution of funds.

Key component #3: Purchasing of services
The purchasing of services is a critical function of financing and entails securing, paying for
and/or budgeting of funding resources to health service providers, such as physicians or
hospitals, for meeting population health needs.

A significant proposition by the WHO revolves around the development and application of
strategic purchasing to meet population health needs. Strategic purchasing is a
health financing strategy that seeks to align funding and financial
incentives with guaranteed health services, often determined through
detailed information on the performance of providers and the health
needs of the population served (WHO, 2017b). In order to fully incorporate strategic
purchasing into a health system, it is crucial that information management systems are first
strengthened and expanded. Data pertaining to quality and service-delivery outputs, as well

38