healthcare financing system

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components and methods. dr m umar sahi

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CRITICAL REVIEW OF HEALTHCARE FINANCING SYSTEM IN PAKISTAN Dr. Muhammad Umar Sahi . Post Graduate Trainee. AllamaIqbal Medical College/Jinnah Hospital Lahore.Pak . Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

AIMS AND OBJECTIVES: 

Components of healthcare financial system Critical analysis of components Trends in Pakistan An ideal framework of financial system Flaws in Pakistan Recommendations AIMS AND OBJECTIVES Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

INTRODUCTION Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

The term healthcare financing refers to the ways in which money is raised to fund health activities as well as how it is used (that is, the allocation of funds) Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

The Current Government Setup: 

The Current Government Setup Federal Provincial District Funds Oversight Reporting Funds Oversight Reporting Policy Budget Surveillance Direct Oversight Direct Implementation Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

NATIONAL FINANCE COMMISSION (NFC) AWARD Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

National Finance Commission (NFC) Award is an arrangement through which the federal government transfers funds to provincial governments . Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

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**The NFC Award has been remaining the cause of disagreement between provinces because of their respective shares . Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

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The provinces differ on the criteria set for the Award. Sindh has demanded the share based on revenue collection. Punjab stresses for a population basis while NWFP and Balochistan are insisting on area and backwardness to be made the basis for the Award . . Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

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It is assumed that the new NFC Award would be based on a revised Divisible Pool allocation formula. The new formula might be extended beyond the criterion of population to include area or the Human Development Index (HDI) . Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

WHAT MAKES THE FINANCIAL SYSTEM COMPLEX: 

Population growth Relentless burden of diseases ,, Scarce resources Troubles with alternative mechanisms Unregulated private sector Veak administration And inefficient use of available health budget. WHAT MAKES THE FINANCIAL SYSTEM COMPLEX Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Healthcare financing is the most vital part of policy planning& implementation. THE BACK BONE..!! Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

DIFFERENTWAYS TO FINANCE HEALTH CARE Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

T here are five methods of financing healthcare in a country. These include taxes ; social insurance; private insurance; community financing; and out-of-pocket payments. Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

In Pakistan, mainly two methods of financing healthcare are being used. These are general tax revenue out-of-pocket payments. WHILE Social insurance and private insuranc have a minor share in financing healthcare . Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Discussion of all 5 components. *What are they *Pros *Cons *Strengths *Weaknesses Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

TAXES: 

The international experience shows that public expenditures (general tax revenue) on health are a potentially important source of financing of healthcare for the larger sections of society. Taxation is the main source of funding of certain types of healthcare. The main job of taxation is to raise revenue in a secure and reliable fashion . TAXES Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

There are various sources of taxation: 

Main sources are General sales tax; import duties; excise tax; corporate income tax; personal income tax; social security; earmarked tax; user fees. There are various sources of taxation Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

SOCIAL INSURANCE: 

Social insurance has Some characteristics that distinguish it from other methods. First, it is compulsory. Secondly, benefits and premium in this scheme are set through laws established through legislation. This financing mechanism is very effective in the formal sector. SOCIAL INSURANCE Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

PRIVATE INSURANCE: 

Private insurance on the contrary is a voluntary scheme . Private insurance does not consider risk or ability to pay which means preference is given to those who have no imminent risk and simultaneously are able to pay. The affluent class mostly prefers to be insured through this mechanism PRIVATE INSURANCE Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

OUT OF POCKET PAYMETNS: 

Out-of-pocket payments are one of the important financing mechanisms in PAKISTAN. Through this mechanism, the patient pays to the provider for the goods and services he or she receives. Its costly OUT OF POCKET PAYMETNS Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

COMMMUNITY FINANCING : 

It’s the social cohesion and spirit of mutual assistance that can exist in a small community. These social forces would make it possible to organize prepayment schemes to fund and spend money locally, at the village and township level. Then the local community fund can organize primary care and perhaps fund a proportion of secondary services. In effect, the result is a community-based, mini health maintenance organization, with salaried practitioners, organized referral arrangements, and organized purchases of drugs and supplies. Secondary care is contracted with district hospitals. COMMMUNITY FINANCING Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Strengths and Weaknesses of different financing methods Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

General tax: 

Strength Applied through legislation Equity Flexible High revenue at low admin cost Weakness legislation not simple Due to international accounting practices Poor revenue if Law n Order is poor Show regression if equity is not addressed General tax Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Out of pocket payments: 

In low-income countries 40-50% of the expenditure comes from OOP Cost of care borne through OOP pushing people into poverty No reliability of services Doctor's choice may overwhelm and result into more cost Issues of affordability, accessibility and equity Out of pocket payments Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Community Financing: 

Potential of becoming a community based, mini health maintenance organization. with salaried practitioners, referral, purchase of drugs and supplies, secondary care contracted with district. Rural poor and low income household don't have limited capacity to pay Community Financing Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Social Insurance: 

Effective method to cover formal sector No attraction for non-formal sector Social Insurance Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Private Insurance: 

Financing may be raised from those who can pay Premium reflects byers risk rather than ability to pay Only higher income group can pay Insurance companies prefer only healthy persons leaving sick and elderly to be paid from tax revenue Problems of risk selection Private Insurance Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

TRENDS IN PAKISTAN : 

TRENDS IN PAKISTAN Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

TRENDS IN PAKSITAN: 

77% payments are out-of-pocket (OOP) and 23% by public sector. All groups, extremely poor, poor and non poor go to private in majority TRENDS IN PAKSITAN Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Only one million of the population is covered through social insurance provided by Employees Social Security Organization while another 0.93 million people have health cover through their employers eg PIA, Pakistan Railways…… Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

HEALTH EXPENDITURE IN PAKISTAN Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

FISCAL YR EXPENDITURE AS%OF GDP 1995-97 17,348Million 0.8 1997-99 20,236 0.7 1999-02 23,921 0.7 2002-05 33206 0.6 Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Health Expenditure in Pakistan in comparison to some regional countries 2002 Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Country THE %of GDP PerCapita THE($) Pakistan 3.2 18 India 6.1 30 Iran 6 104 Sri lanka 3.7 32 B.Desh 3.1 11 Nepal 5.2 12 Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Expenditure shared by govt.: 

While the per capita health expenditure in Pakistan is US$ 18 out of which, public sector provides only US$4; the rest comes from private sources i.e. out-of-pocket payments. In case of India, Iran, Sri Lanka these figures are US$30 and 6; US$104 and 50; US$32 and 16, respectively. Expenditure shared by govt. Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

PAKISTAN LAGS BEHIND: 

The low level of the health expenditure in Pakistan can be described simply to be less than the actual needs; the level of funding is not comparable with other countries in the region; and that it's below internationally recommended standards i.e. WHO's recommendations. PAKISTAN LAGS BEHIND Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

We need a sound healthcare financing policy.. Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Purpose of a Sound Health Care Financing Policy: 

Beyond “how much should we spend…” A sound HCF policy should look at: The Overall need and Available funds How money flows to ensure the system reaches its objectives Creating incentives to enhance health care delivery Provide social protection against routine and catastrophic health care expenses Purpose of a Sound Health Care Financing Policy Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Sound health policy in Pakistan: 

One of the significant developments in this regard is a framework developed by a Working Group of the Commission on Macroeconomics and Health on Mobilizing Domestic Resources for Health (2002). This framework provides strategic options to finance healthcare aiming for different population groups. The framework involves four steps Sound health policy in Pakistan Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

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The first step is to set goals for the health system. • Second step calls for situation analysis and capacity to raise financing to cater to the needs identified in situation analysis. •Third.. Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

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analysis of relative strengths and weaknesses of various financing methods would be considered to know the potential of such methods before their application. Finally, alternative combinations of financing mechanisms should be assessed to achieve health goals. Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

SITUATIONAL ANALYSIS: 

An analysis of districts of Pakistan reveals that 83.7% are poor as compared to 16.1% are rich More tax revenue in these areas to ensure equitable access to health; Community financing to enable poor to get care; SITUATIONAL ANALYSIS Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

ANALYSIS: 

All rural areas are backward as compared to urban areas. Numbering sequence is rural areas of Punjab, NWFP, Balochistan and Sindh More tax revenue targeted as per the sequence; ANALYSIS Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

ANALYSIS: 

50% of the total wealth is held by 20% riches quintile and 7% is held by 20% poorest quintile Tax revenue targeted at poorest; ANALYSIS Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

ANALYSIS. Some current restraints: 

Limited revenue collection (<15% of GDP) Limited revenue collection by provincial or district governments Under utilization of allocated funds ANALYSIS. Some current restraints Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

ALTERNATE MECHANISM Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

It is recommended that a new healthcare financing strategy should be finalized in line with broader health goals. Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

At this step, framework suggests breakdown of population into income and employment groups in order to set alternate financing mechanisms Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Is increased funding needed…: 

Absolutely! However, this is not the final answer Health outcomes are not well correlated with high spending In fact setting a total as a target may not be very helpful Equally important to prioritize funding design technically sound interventions and monitor results that are geared towards effective and equitable targets Is increased funding needed… Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

strategy include , to focus the tax revenue. Tax revenue has a significant role to play. It will have to ensure equitable distribution of resources and provision of public goods. • The bottleneck is timely disbursement of funds should be addressed along with proper utilization and monitoring. . Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

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ACHIEVING GOALS BY DISTRIBUTION OF POPULATION INTO INCOME AND EMPLOYMENT GROUPS Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

HOW,,,,: 

An analysis of the population should be conducted to find out how the population is divided into income and employment segments. After establishing these groupings, we shall apply different financing methods as appropriate for the group concerned in the context of strengths and weaknesses of the methods as discussed Economic survey must be conducted of it. HOW,,,, Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

RECOMMENDATIONS: 

Increased donor support to finance the provision of public goods and to ensure access for the poor to essential services Conversion of out-of-pocket expenditures into pre-payment schemes, including community financing programs supported by public funding, where feasible Efforts to address existing inefficiencies in the way in which government resources are presently allocated and used in the health sector. social sector programs focused on the poor. RECOMMENDATIONS Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

CONCLUSION: 

WHAT WE WILL GAIN?? CONCLUSION Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore

Dr.Muhammad Umar Sahi. AllamaIqbal Medical College/Jinnah Hospital Lahore