Finally, the potential yield from user fees is unclear. inflation through the repercussions of high increases in staff pay); foreign exchange problems through heavy foreign borrowing for development projects or for payments for imports such as pharmaceuticals or equipment; opportunity costs such as the attraction of scarce manpower into the health sector at the expense of other professions; and disincentives to investment and employment (e.g. Social insurance can finance health care, as well as other needs such as invalidity and old age support, for either the whole population or a part of it. Financing from external (foreign) sources is considered ‘public’ when the funds flow through recipient governments. CDC Procurement and Grants Office . sources of revenues. Revenues should come from pre… The difference in the proportionate contribution from these stated sources determine the extent to which such health sector will go in achieving successful health care financing … These external effects may also be positive as in the case of improved productivity resulting from reduced death and disability in the work force. The administrative difficulties of implementing a fee system (e.g. The evidence concerning the demand for health care in developing countries is mixed but suggests that, especially for low income groups, demand may be elastic with respect to price, falling as price increases and resulting in significant shifts in the use of alternative providers. In 1998, expenditures on personal health care services totaled $1 trillion with 19.6 percent paid directly by patients (out-of-pocket payments) and 80 percent paid by third parties (Health Care Financing Administration, http://www.hcfa.gov/stats/nheoact/tables). The cost of enjoying the use of these funds in the present rather than the future is the interest that needs to be paid on the loan. Thus the agency doing the deficit financing must be endowed with the authority to impose additional taxes or fees, or be given a claim on general tax revenue in order to service the debt. At the same time, the options for increasing funds can be considered - using appropriate evaluation criteria. Deficit finance may be raised nationally or internationally, through mechanisms such as the issuing of bonds or certificates or long-term low-interest loans. As a result, premiums are likely to vary for different individuals or groups. The net resources available for the purposes of health care delivery consist of total revenue minus the administrative and other costs of collection. Governments have in many instances an increasingly favourable attitude to the development of social insurance. Public sector sources and external sources are typically less flexible than private sector sources in this respect. In the past few years there has been increasing interest in some developing countries (especially in Latin America) in health maintenance organizations (HMO), an innovative pattern of health insurance and health care organization developed in the USA. Past reliance on deficit financing in the economy as a whole is now burdening many countries with excessive debt repayment problems. Charitable or voluntary contributions can take the form of financial support or in-kind donations (e.g. As risks are pooled, there is an unequal benefit distribution in favour of high-risk (high-need) workers. In Nigeria, the health sector is financed through different sources and mechanisms. Although useful for many developing countries in helping to develop and expand health care infrastructure, foreign aid is often limited to supporting import components. Second, the price (or 'premium') charged for private health insurance is not based on the pooled risks of a large population, but on personal risk characteristics and the likelihood of illness in the individual or group covered. The typical net yield from lotteries is between 10-30% of gross receipts. The sources may also influence the nature of the production technology and the type of health personnel employed. Like demand incentives, these supply-side spin-offs of financing policies are often ignored. We find that private health spending has on average a higher health-promoting effect than public health … Consequently some governments and many non-governmental agencies are turning to communities for organization, participation and financial support, and communal self-help is increasingly thought of as an important source of financial support for health services in developing countries. personal services, physical facilities, equipment and supplies), and may originate from business enterprises, wealthy families, religious organizations or private individuals. health care goods and services rely on a mix of different. Low-income groups tend to delay use of health services until illness is severe, presumably in part to avoid payment, but such delay generally only increases the necessary expenditure. The main sources of revenue for private health insurance are either compulsory or voluntary prepayments, which typically take the form of regular premium payments as part of an insurance … When it is used, deficit financing is typically for specific construction projects (e.g. Although not a major source of health sector finance in most countries, they may constitute an important source of finance for specific projects or programmes. 1.3 Demand/utilization and consumer behaviour. Opponents of community financing mechanisms argue that it puts the burden of financing on those least able to afford it (often the poorer rural communities). Public sources of funding include those which are compulsory and pre-paid; meaning paid before the need for care is identified or care is accessed. In the area of Health Financing, WHO provides evidence-based policy and technical support to Member States to improve health system financing in terms of policy development, allocation and tracking of funds, social and financial risk protection, equity in financing … General lax revenue is used in almost every country of the world to finance certain components of health care and, in developing countries, it is often the most important source of financing. Non-tax revenues are from state-owned companies, including natural resource revenues such as oil and gas. Despite broad access to health facilities, there is potential for improving utilization of services and high-quality interventions. Overall, it is argued that social insurance reinforces the maldistribution of resources between rural and urban areas in developing countries. hospitals and water and sewerage systems). Consequently, a framework for explaining the impact of the scheme within the context of Nigeria was … It is also important to recognize that health financing problems are not simply health sector problems, but often reflect economy-wide difficulties. Public sources of funding include those which are compulsory and pre-paid; meaning paid before the need for care is identified or care is accessed. People may use and buy non-government (e.g. HEALTHCARE FINANCING COMMITTEE (HCF) The health sector in Kenya relies on several sources of funding: public (government), private firms, households and donors (including faith based organizations and NGOs) as well as health … The main problems of social insurance are related to issues of equity. These are often taxes. Rather than generating additional resources for the health sector, new or expanded financing mechanisms may merely displace funding from other sources. Thus the role of charitable and voluntary contributions is decreasing, although it may still be important in times of emergency or disaster and can be a useful supplement to other forms of health finance. Deficit finance may also be raised from abroad in the form of bilateral or multilateral aid loans, typically given for a project life of between three and five years, and thereby constituting only a short-term source of support. Developing countries are assumed to have regressive financing systems because they tend to rely on indirect taxation, but in practice their tax systems may be progressive because the poorest sections of society fall outside the formal economy and indirect taxes may be levied primarily on luxury items consumed predominantly by the wealthier population groups. Even where only the lime price of health care (resulting from travel and waiting times) has been considered, the evidence supports this finding; and other factors, such as poor access to facilities, is also recognized to undermine utilization. Finally, the net yield of any source is a reflection of efficiency. Taxes on business transactions, profits and incomes are all of lesser importance. Moreover, the out-of-pocket expenditure cannot be considered as a reliable source of funding to build a resilient service delivery systems. Current primary health care initiatives in developing countries stress the importance of national self-reliance and community participation in health care delivery. The equity impact of tax systems is dependent on both the proportional burden of taxation and on the use which is made of the revenue raised. For example, donors may have different priorities from the recipient nation and may not recognize their most urgent health needs. Health care payments also sometimes displace expenditure for other basic necessities of life (e.g. An alternative standard that is more fair, therefore, is that the distribution of the burden of paying for health care should reflect differences in ability to pay - vertical equity. Health care is paid for by government programs (such as Medicare and Medicaid), private health insurance plans (usually through employers), and the person's own funds (out-of-pocket). Many existing financing policies have paid little attention to the incentives they create or reinforce, or to their ensuing impact upon service providers, households, and government agencies. mission, private, traditional) health care partly because they have no cheap or good quality government alternative. Unless such projects sell their services or contribute directly to increased output that can be taxed to service the debt, the deficit must be repaid from general tax revenue. 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