Health inequity

Health financing refers to the function of a health system that is concerned with the mobilization, accumulation, and allocation of money to cover the health needs of the people, individually and collectively, in the health system. The aim of health financing is to make funding available, as well as to set the right financial incentives to providers, to ensure that all individuals have access to effective public health and personal health care.

Overview

Health financing is one of the core components of health systems and directly impacts the achievement of universal health coverage. It involves not only methods of raising money for health care, but also allocation of those funds. The financing system is critical in moving towards universal health coverage and is a key determinant of health system performance in terms of equity, efficiency, and health outcomes.

Methods of Health Financing

There are three basic ways of financing health care: taxation, social health insurance, and voluntary or private health insurance. Each method has its own set of potential advantages and disadvantages.

Taxation

In a tax-based financing system, health services are funded through general taxation from the state budget. This method is commonly used in countries with a strong tradition of publicly funded services, such as the United Kingdom and Scandinavia.

Social Health Insurance

Social health insurance is a system where employees, employers, and sometimes the state contribute to a health fund. This fund is then used to pay for health care services for contributors and their dependents. This method is common in many European countries, such as Germany and France.

Private Health Insurance

Private health insurance involves individuals or groups paying premiums to private companies who then reimburse health care costs. This method is common in countries such as the United States.

Challenges in Health Financing

Health financing faces several challenges, including raising sufficient funds, ensuring financial protection, and improving efficiency and equity. Addressing these challenges requires comprehensive strategies that consider the entire health financing system.

See Also

• Health economics
• Health insurance
• Universal health coverage