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Health financing system

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A good health financing system raises adequate funds for health, in ways that ensure people can use needed services and are protected from financial catastrophe or impoverishment associated with having to pay for them.[1] Health financing systems that achieve universal coverage in this way also encourage the provision and use of an effective and efficient mix of personal and non-personal services.

Three interrelated functions are involved in order to achieve this:

  • the collection of revenues from households, companies or external agencies;
  • the pooling of prepaid revenues in ways that allow risks to be shared – including decisions on benefit coverage and entitlement; and purchasing;
  • the process by which interventions are selected and services are paid for or providers are paid.

The interaction between all three functions determines the effectiveness, efficiency and equity of health financing systems.

Health system inputs: from financial resources to health interventions

Like all aspects of health system strengthening, changes in health financing must be tailored to the history, institutions and traditions of each country. Most systems involve a mix of public and private financing and public and private provision, and there is no one template for action. However, important principles to guide any country’s approach to financing include:

  • raising additional funds where health needs are high, revenues insufficient and where accountability mechanisms can ensure transparent and effective use of resources;
  • reducing reliance on out-of-pocket payments where they are high, by moving towards prepayment systems involving pooling of financial risks across population groups (taxation and the various forms of health insurance are all forms of prepayment);
  • taking additional steps, where needed, to improve social protection by ensuring the poor and other vulnerable groups have access to needed services, and that paying for care does not result in financial catastrophe;
  • improving efficiency of resource use by focusing on the appropriate mix of activities and interventions to fund and inputs to purchase;
  • aligning provider payment methods with organizational arrangements for service providers and other incentives for efficient service provision and use, including contracting;
  • strengthening financial and other relationships with the private sector and addressing fragmentation of financing arrangements for different types of services;
  • promoting transparency and accountability in health financing systems;
  • improving generation of information on the health financing system and its policy use.

This section of the health system profile is structured as follows:

Contents

Analytical summary

Over 66% of the total health funding in the Gambia comes from international health development partners, raising issues of sustainability and predictability of funding to the sector.[2] Between 2010 and 2011, about 10–11%[3] of the Government's budget was allocated to the health sector, basically for recurrent and development costs, which is still below the Abuja target of 15%.[4]

The cost of providing health care continues to rise owing to increasing demand, changes in diagnostic and therapeutic technologies, inflation and currency fluctuations.[5] This requires that current funding levels be increased to enable the Ministry of Health and Social Welfare to deliver quality services to the population. There is a need to advocate for the funding of the health sector to be increased to at least the 15% Abuja target.

The Ministry of Health and Social Welfare spends the bulk of its budget on capacity-building for health care workers, purchase of equipment, logistics and supplies, and medications and vaccines. Evidence indicates a decline in household’s direct out-of-pocket payment contribution to total health expenditure, which has fallen from 12% in 2002, to 11% in 2003 and 9% in 2004.[6]

At present, the Government of the Gambia uses many channels for the pooling of resources for health financing. These include the prepayment system, where funds collected through taxes, levies, special funds and insurance contributions are used to protect citizen by reducing out-of-pocket spending. The issue of introducing health insurance for public services is currently in progress. The Personnel Management Office is currently working on an insurance scheme for the public service. However, this will only cover a small percentage of the population and ways of further protecting the rest of the population are needed.

The Gambia Public Procurement Authority is responsible for ensuring efficient, effective and transparent procurement procedures. The health sector is sometimes constrained in that emergency purchases are inadvertently delayed due to the need to follow such procedures.

The private sector finances health services through a parallel system that is used mainly by those who can afford to pay the fees, which are higher than the Government charges.


Organization of health financing

Health expenditures patterns, trends and funding flows

Funding sources

Pooling of funds

Institutional arrangements and purchaser provider relations

Payment mechanisms

Priorities and ways forward

Others

Endnotes: sources, methods, abbreviations, etc.

References

  1. Everybody’s business. Strengthening health systems to improve health outcomes. WHO’s framework for action (pdf 843.33kb). Geneva, World Health Organization, 2007
  2. National health accounts 2002, 2003, 2004 (789.53kb). Banjul, Government of the Gambia, Department of State for Health and Social Welfare, 2007
  3. Ministry of Health and Social Welfare estimates 1998─2011 (Government local funds only). Banjul, Government of the Gambia, Directorate of Planning and Information, Health Financing Unit, 2010
  4. Health Financing Policy, 2009. Banjul, Government of the Gambia, Ministry of Health and Social Welfare, 2009
  5. World health report 2007. A safer future. Global public health security in the 21st century (pdf 3.96Mb). Geneva, World Health Organization, 2007
  6. Estimates of revenue and expenditure, 2002─2007. Banjul, Government of the Gambia, Department of State for Finance and Economic Affairs