Frameworks for analysis

Comparative analysis of health fi nancing requires a framework that facilitates comparison across countries with diverse national contexts. In this chapter we present two frameworks. Th e fi rst looks at health fi nancing in terms of functions, while the second establishes a set of health fi nancing policy goals.

Health fi nancing functions

Traditional classifi cations of health systems in diff erent countries often emphasize a single dimension of health fi nancing. For example, it is common to distinguish tax-fi nanced systems (labelled “Beveridge” in western Europe and “Semashko”

in former Soviet Union countries) from social health insurance systems (labelled “Bismarck(ian)”). However, focusing on the dominant mechanism used to generate funds for health care has limited analytical value, for two reasons. First, it fails to capture the multiple functions and diff erent areas of policy encompassed by health fi nancing. Consequently, it may conceal crucial similarities and diff erences between countries in relation to other important aspects of health fi nancing. Second, it fails to refl ect the shift towards mixed models of health fi nancing that has occurred in many countries since the late 1980s (Kutzin 2001; WHO Regional Offi ce for Europe 2006).

Th e framework we employ depicts the full range of health fi nancing functions and policies (see Fig. 2.1) (Kutzin 2001; Mossialos et al. 2002b; WHO Regional Offi ce for Europe 2006). Rather than categorizing health systems based on a single dimension, it encourages comparison across multiple dimensions.

Th is has three advantages. First, the framework can be used to describe the

health fi nancing system of any country, regardless of context or category.

In every country, health fi nancing will involve the three functions of collection, pooling and purchasing (see Chapter 2 for defi nitions of each function), even if these functions are integrated rather than carried out separately.

Second, drawing attention to each function and policy area facilitates analysis of health fi nancing reforms, since reforms may aff ect specifi c functions rather than health fi nancing as a whole. For example, the Dutch health insurance reforms introduced in 2006 changed the balance between the two public contribution mechanisms (away from earmarked social insurance contributions levied on wages, towards fl at-rate premiums), but did not change the organization responsible for collecting and pooling funds (a central government agency) or the mechanism used to allocate funds to purchasers. In addition, there have been changes in the nature of the purchasing agencies: public health insurance funds and private insurers that were formerly in separate arenas now compete on an equal footing as private entities regulated under private law. Th ere have also been changes in policies relating to benefi ts and cost sharing, with the introduction of voluntary deductibles (Bartholomée & Maarse 2006). Conversely, a French reform in 1998 signifi cantly altered the nature of the dominant contribution mechanism (replacing almost all of the employee social insurance contribution

Fig. 2.1 Framework for descriptive analysis of health fi nancing functions

Sources: Adapted from Kutzin 2001 and WHO Regional Offi ce for Europe 2006.

Cost sharing Health services

Collecting funds Providing services

Purchasing services

Pooling funds

Coverage Coverage

Choice?

Choice?

Contributions

Stewardship of financing (governance, regulation, provision of information) The population

Entitlement?

levied on wages with an earmarked tax on income), but did not aff ect other aspects of health fi nancing (Sandier et al. 2004). Focusing on the full range of functions allows us to identify areas in which health systems face particular challenges, as well as those in which the most may be done to enhance specifi c health fi nancing policy goals (see later) and fi nancial sustainability.

Th ird, the framework contributes to evaluation by highlighting aspects that might otherwise be overlooked. For example, private health insurance premiums are not the dominant contribution mechanism in any Member State and therefore play a limited role in terms of revenue collection. However, in some countries private health insurance has a signifi cant impact on the way in which funds are pooled and services are purchased and on policies relating to benefi ts and cost sharing, with major implications for the achievement of policy goals (Mossialos & Th omson 2004; Th omson & Mossialos 2006).

A classifi cation based on a single dimension, such as the dominant contribution mechanism, would conceal this important eff ect and might obscure shifts in the public–private fi nancing mix in many countries.

Health fi nancing policy goals

We also refer to a set of fi nancing policy goals developed by the World Health Organization (WHO) based on the health system performance goals established in Th e world health report 2000 (WHO 2000; WHO Regional Offi ce for Europe 2006). Th ese policy goals closely mirror the values underpinning EU health systems identifi ed by the Council of the European Union (universal coverage, solidarity in fi nancing, equity of access and the provision of high-quality health care) and the common principles identifi ed by the European Commission (accessibility, quality and long-term sustainability) (European Commission 2005). Th e policy goals also provide a basis for the review and analysis of reform options and outcomes.

Th e goals are as follows:

• promoting universal protection against the fi nancial risks associated with ill health – fi nancial protection aims to ensure that people do not become poor as a result of using health care;

• promoting a more equitable distribution of the burden of fi nancing the health system – equity in fi nance requires richer people to pay more for health care, as a proportion of their income, than poorer people;

• promoting equitable use and provision of services – equity of access to health care based on need rather than ability to pay;

• improving the transparency and accountability of the system – for example, ensuring that the entitlements and obligations of the population are well understood by all, addressing the issue of informal payments where relevant, auditing institutions and monitoring and reporting on performance;

• rewarding good quality care and providing incentives for effi ciency in service organization and delivery;

• promoting administrative effi ciency by minimizing duplication of responsibility for administering the health fi nancing system and minimizing costs that do not contribute to achieving the aforementioned goals (set out earlier).

In our analytical framework we take the view that ensuring fi scal sustainability should be a requirement rather than an objective of health fi nancing policy.

We also emphasize the importance of distinguishing between fi scal and economic sustainability. For example, while countries should rightly be concerned about addressing the problem of persistent defi cits in the health sector, focusing solely on lowering defi cits does not ensure economic sustainability and may draw attention away from the underlying ineffi ciencies leading to fi nancial imbalance (WHO Regional Offi ce for Europe 2006).