Financing

A good health financing system raises adequate funds for health, in ways that ensure people can use needed services, and are protected from financial catastrophe or impoverishment associated with having to pay for them. It promotes treatment according to need, and encourages providers to offer an effective mix of curative and preventive services. Achieving this involves three interrelated functions: the collection of revenues (from households, companies or external agencies); the pooling of pre-paid revenues in ways that allow risks to be shared; and the purchasing of interventions or services. The interaction between all three functions determines the effectiveness, efficiency and equity of health financing systems.

Most systems involve a mix of public and private financing and public and private provision. Prepayment mechanisms such as taxation and health insurance are generally non-existent in fragile states, resulting in limited public health services provision. Populations with high levels of poverty and a high burden of disease are therefore highly reliant on the private sector for health services, where out-of-pocket payments contribute to a risk of financial catastrophe.

In an (early) recovery setting, health ministries face a considerable challenge in establishing and maintaining efficient and appropriate health financing mechanisms. Inadequate health information systems and fragmented sources of funding often turn the costing of national health services into an “educated guess”. National Health Accounts (NHAs) could provide more reliable information to assist in planning, but complete information on all sources of funding is seldom available. Sector-Wide Approaches and Multi-Donor Trust Funds, where funds are pooled into a single basket, could facilitate the development of NHAs as well as contribute to greater efficiency within the health sector. A toolkit for developing NHAs is available on the WHO website (see the links to relevant Eldis and WHO websites on this page).