How to protect people from the financial consequences of health-care payments?
Reducing financial barriers through prepayment and pooling - strength in numbers
Out-of-pocket payments cause financial hardship
Direct, out-of-pocket health payments, including payments for medicines, fees for consultations and procedures and, sometimes, informal payments, are barriers for access to health services and cause financial hardship to those who have to resort to paying them in order to get the services they need. Even if people have some degree of financial protection from prepaid funds, they may need to “cost-share” (e.g. co-payments, co-insurance, deductibles, user fees).
Pooling and pre-payment mechanisms key to universal health coverage
Health systems requiring direct, out-of-pocket, payments from people at the time they need care prevent hundreds of millions from accessing services and result in financial hardship, even impoverishment, for millions more.
Reducing the reliance on direct, out-of-pocket payments will lower the financial barriers to access and reduce the impoverishing impact of health payments. Increasing the level and share of revenues channelled through prepaid and pooled mechanisms, reducing fragmentation to increase the redistributional capacity of the pooled funds, and using the pooled funds to cover the health care costs for those in need, are key elements of the broad strategy that countries need to rely on in order to move towards universal coverage.
The countries that have made the most progress on access and financial protection objectives have implemented successfully mandated contributions for people who can afford to pay through taxation, and/or compulsory earmarked contributions for health insurance.
Fragmentation of pooling reduces effectiveness
Pooling of funds is a pre-condition for redistributing them to persons with the greatest health needs. Organizing compulsory prepaid revenues in fewer pools enables more redistribution than the same level of total funds organized in more pools. Through reforms that reduce fragmentation in pooling, countries can increase the potential to provide financial protection and equity of access from a given level of prepaid funds.
Consideration of all sources of funding essential
While no country has attained universal coverage by relying principally on voluntary schemes, such as many forms of community health insurance or private commercial health insurance, voluntary health insurance can play a useful role if used in a manner that is explicitly complementary to the compulsory prepaid system. Hence, consideration of all sources of funds in an integrated national health financing strategy is essential for progress, particularly in countries that lack the fiscal capacity needed to generate high levels of compulsory prepaid funding.
Some people will face financial barriers to access even if direct payments are eliminated; transport and accommodation costs to obtain treatment might still prove prohibitive. Governments must consider options, including cash transfers and vouchers, for reducing these barriers.