39913 HNP DISCUSSION PAPER Public Disclosure Authorized Public Disclosure Authorized Analyzing Changes in Health Financing Arrangements in High-Income Countries Public Disclosure Authorized Public Disclosure Authorized A Comprehensive Framework Approach About this series... This series is produced by the Health, Nutrition, and Population Family (HNP) of the World Bank’s Human Development Network. The papers in this series aim to provide a vehicle for publishing preliminary and unpolished results on HNP topics to encourage discussion and debate. Reinhard Busse, Jonas Schreyögg, and Christian Gericke The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent. 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THE WORLD BANK Public Disclosure Authorized Public Disclosure Authorized 1818 H Street, NW Washington, DC USA 20433 Telephone: 202 473 1000 Facsimile: 202 477 6391 Internet: www.worldbank.org E-mail: [email protected] February 2007 Analyzing Changes in Health Financing Arrangements in High-Income Countries A Comprehensive Framework Approach Reinhard Busse, Jonas Schreyögg, and Christian Gericke February 2007 Health, Nutrition and Population (HNP) Discussion Paper This series is produced by the Health, Nutrition, and Population Family (HNP) of the World Bank's Human Development Network. The papers in this series aim to provide a vehicle for publishing preliminary and unpolished results on HNP topics to encourage discussion and debate. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent. Citation and the use of material presented in this series should take into account this provisional character. For free copies of papers in this series please contact the individual author(s) whose name appears on the paper. Enquiries about the series and submissions should be made directly to the Managing Editor, Nicole Klingen ([email protected]). Submissions should have been previously reviewed and cleared by the sponsoring department, which will bear the cost of publication. No additional reviews will be undertaken after submission. The sponsoring department and author(s) bear full responsibility for the quality of the technical contents and presentation of material in the series. 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For information regarding this and other World Bank publications, please contact the HNP Advisory Services at [email protected] (email), 202-473-2256 (telephone), or 202-522-3234 (fax). © 2007 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 All rights reserved. ii Health, Nutrition and Population (HNP) Discussion Paper Analyzing Changes in Health Financing Arrangements in High-Income Countries: A Comprehensive Framework Approach Reinhard Bussea Jonas Schreyögg b Christian Gericke c a Berlin University of Technology, Department of Health Care Management - WHO Collaborating Centre for Health Systems Research and Management, Berlin, Germany b Berlin University of Technology, Department of Health Care Management - WHO Collaborating Centre for Health Systems Research and Management, Berlin, Germany and Stanford University, Center for Health Policy, USA c The University of Adelaide, Discipline of Public Health, Adelaide, Australia The World Bank commissioned the paper for Health Financing Revisited out of the World Bank budget. Abstract: This review is one in a series of analytic efforts designed to inform the policy debate related to health financing. The authors review evidence on health financing arrangements in high income countries as well as reforms over the last 30 years and to identify key policy lessons from this experience for low and middle income countries. Methodology: The review is based on a conceptual framework of health financing “functions”. 25 high-income countries have been grouped for comparative evaluative purposes into three groups, based on the main mechanism of financing health care (social health insurance, taxes, private). Decisions on coverage and benefit entitlements as well as various functions of health care financing (i.e. collecting, pooling and purchasing) are described and analyzed. Results: The pooling function is most essential in order to provide coverage to as many individuals as possible, thus reducing their financial risk being the principal aim of public health financing. Both SHI contributions and taxes are ways to collect resources, which are publicly administrated and flow into one or several public pools. Private health insurance, medical savings accounts and other forms of private resource collection can only be supplementary models for increasing universal coverage. The evolution of health financing schemes towards universal coverage was pretty similar in the included countries. Since it is difficult to attribute outcomes to certain financing mechanisms a best practice to design health financing arrangements – e.g. tax-based or SHI – cannot be defined. Next to the precondition of economic growth, the most essential lessons are to initiate pilots for health insurance schemes on a voluntary and/or local basis, to foster the ability to administrate, to ensure political commitment to expand population coverage, to iii combine expansion of population coverage with risk-pooling and to ensure evaluation of products and services at each stage. Keywords: social health insurance, health care benefits, resource collection, resource pooling Disclaimer: The findings, interpretations and conclusions expressed in the paper are entirely those of the authors, and do not represent the views of the World Bank, its Executive Directors, or the countries they represent. Correspondence Details: Professor Reinhard Busse, Berlin University of Technology, Department of Health Care Management - WHO Collaborating Centre for Health Systems Research and Management, EB 2, Strasse des 17. Juni 145, 10623 Berlin, Germany, Tel. +49 30 314-28420, Fax. +49 30 314-28433, [email protected], http://mig.tu-berlin.de iv Table of Contents ACRONYMS AND ABBREVIATIONS....................................................................... vii ACKNOWLEDGEMENTS ............................................................................................ ix PREFACE.........................................................................................................................xi PART I - COVERAGE DECISIONS AND BENEFIT ENTITLEMENTS................. 1 WHO IS “ENTITLED”? ....................................................................................................... 1 Social Health Insurance System Countries ................................................................. 2 Mainly Tax-Financed System Countries ..................................................................... 3 WHAT IS COVERED? ......................................................................................................... 6 Social Health Insurance System Countries ................................................................. 6 Mainly Tax-Financed Systems..................................................................................... 7 HOW MUCH OF HEALTH COSTS COME OUT OF POCKET?..................................................... 8 SUMMARY ...................................................................................................................... 10 PART II - COLLECTION OF FUNDS ........................................................................ 11 AMOUNTS COLLECTED................................................................................................... 12 SOURCES OF FINANCING................................................................................................. 12 FINANCING MECHANISMS .............................................................................................. 13 Direct and Indirect taxes........................................................................................... 15 Compulsory Social Health Insurance Contributions ................................................ 16 Voluntary Insurance Premiums................................................................................. 17 Medical Savings Accounts......................................................................................... 18 Out-of-pocket payments............................................................................................