Each country has to determine its own mix of financing mechanisms

Developing financing mechanisms that generate sufficient funds is a key to progress towards universal health coverage. National levels of health expenditure define to a large extent the availability and quality of services. Without adequate funding of health protection systems and schemes, quality health care is not available for all in need.

When selecting financing mechanisms there is no one-size-fits-all model; the criteria for selection will depend on specific national contexts. Most countries that have achieved universal health protection use a mix of tax- and contribution-based financing mechanisms through schemes that reflect the needs of their people. This often includes schemes such as national health services, social and national health insurance involving government subsidization for the poor and vulnerable and mandated private health insurance. For example, Thailand has successfully implemented a universal coverage system based on different financing mechanisms.

It is important that such a financing mix be closely coordinated with a view to close gaps and achieve universal coverage. In order to arrive at an optimal combination of financing mechanisms for a specific country, the applicability and performance of the different mechanisms needs to be assessed on the basis of their capacity to mobilize funds and meeting key criteria such as institutional capacity.

Key criteria for selecting financing mechanisms

Source: ILO, 2014 (ESS-Paper)

 

When embarking on a mixed financing approach, synergies might be created that allow for redistributive effects. Administrative and governance linkages between the various schemes and systems have the potential to enhance efficiency by sharing management functions, such as the collection of contributions and the contracting of providers.

The reasons for selecting mixed financing mechanisms are often related to the country's desire to generate sufficient funds from different sources and to make the best use of the respective advantages of different mechanisms such as large risk pools, stable revenues, and reaching out to populations in remote areas. Optimal financing mechanisms exclude OOP as they impose large amounts of expenditure on private households and reduce the accessibility of necessary health care through financial barriers.

Pros and cons of key financing mechanisms

Source: ILO, 2014