Book contents
- Frotmatter
- Contents
- Preface and acknowledgements
- Introduction: approaching health economics
- Part I Health, healthcare and healthcare systems
- Part II Health economic theory
- Part III From theory to practice: using medical economics to improve global health
- Epilogue: moving beyond the commoditization of health and making better use of the “dismal science”
- References
- Index
17 - Toward rational financing of healthcare
Published online by Cambridge University Press: 20 December 2023
- Frotmatter
- Contents
- Preface and acknowledgements
- Introduction: approaching health economics
- Part I Health, healthcare and healthcare systems
- Part II Health economic theory
- Part III From theory to practice: using medical economics to improve global health
- Epilogue: moving beyond the commoditization of health and making better use of the “dismal science”
- References
- Index
Summary
In Chapter 5 we discussed the way healthcare is actually financed, in Chapter 11 we reviewed theoretical options to finance healthcare, and in this chapter we look at the practical aspects of implementing a rational financing system. This topic is addressed over three chapters because financing of the entire workings of a healthcare system is vitally important. The “bottom line” of funding and generating income or profit is a driver for people's behaviour and, although money is certainly not everything in healthcare, it is not possible to establish a sustainable system that goes against people's basic rights and monetary motivations (Gómez-Dantés 2018). After reviewing the principles of financing and introducing the criteria and three core functions of any financing scheme, we discuss the goals of a government-run health financing scheme. We then go on to consider how to implement a scheme at the national level and look at technical aspects, actuarial calculations and monitoring.
Principles of financing
The core principles of financing healthcare might be described as follows: (1) rational use of pluralistic financing mechanisms; (2) prudent investments; (3) redistribution and justice; (4) reduction of OOP expenditures, including co-payments, to an acceptable level; and (5) national dialogue involving all stakeholders. These are explained below:
Rational use of pluralistic financing mechanisms. Social security can be achieved via different financing concepts, such as state financing, insurance or micro-financing. The criteria of efficiency, equity, feasibility and sustainability can be used to analyse options and develop rational mixes of pluralistic financing modes. In addition, a prudent investment strategy with a strong view on sustainability is urgently needed.
Prudent investments. In a system based on the development of capital stock, the issue of investments becomes extremely important. The classic triad of the availability of funds, security of the investment and returns on the investment needs to be carefully balanced.
Redistribution and justice. To provide social protection for all members of a society, some risk-pooling based on taxes or social insurance contributions is required. The underlying idea is difficult to sell to the general public because individuals are committed to lifelong payments without, ideally, ever getting anything out of the system.
- Type
- Chapter
- Information
- Medical EconomicsAn Integrated Approach to the Economics of Health, pp. 259 - 274Publisher: Agenda PublishingPrint publication year: 2021