WHO (2010): THE WORLD HEALTH REPORT

EXECUTIVE SUMMARY

WHY UNIVERSAL COVERAGE?

Promoting and protecting health is essential to human welfare and sustained economic and
social development. This was recognized more than 30 years ago by the Alma-Ata
Declaration signatories, who noted that Health for All would contribute both to a better
quality of life and also to global peace and security.

Health frequently becomes a political issue?

Not surprisingly, people also rate health one of their highest priorities, in most countries
behind only economic concerns, such as unemployment, low wages and a high cost of living
(1, 2). As a result, health frequently becomes a political issue as governments try to meet
peoples’ expectations.

Promote and sustain health !

Lie outside the confines of the health sector. The “circumstances in which people grow, live,
work, and age” strongly influence how people live and die (3). Education, housing, food and
employment all impact on health. Redressing inequalities in these will reduce inequalities in
health.

Need of Health Services?

timely access to health services – a mix of promotion, prevention, treatment and
rehabilitation – is also critical.
This cannot be achieved, except for a small minority of the population, without a well-
functioning health financing system. It determines whether people can afford to use health
services when they need them. It determines if the services exist.

Universal health coverage ?

Member States of the World Health Organization (WHO) committed in 2005 to develop their
health financing systems so that all people have access to services and do not suffer financial
hardship paying for them (4).
This goal was defined as universal coverage, sometimes called universal health coverage.
In striving for this goal, governments face three fundamental questions:
1. How is such a health system to be financed?
2. How can they protect people from the financial consequences of ill-health and paying for
health services?
3. How can they encourage the optimum use of available resources?

They must also ensure coverage is equitable and establish reliable means to monitor and
evaluate progress.
As the world grapples with economic slowdown, globalization of diseases as well as
economies, and growing demands for chronic care that are linked partly to ageing
populations, the need for universal health coverage, and a strategy for financing it, has never
been greater.
WHERE ARE WE NOW?

The World Health Assembly resolution 58.33 from 2005 says everyone should be able to
access health services and not be subject to financial hardship in doing so.

Service Coverage Side

Factor 1: INCOME
(births, maternal mortality, Within countries, similar variations exist, skilled health worker,
coverage gap, children)
 the proportion of births attended by a skilled health worker can be as low as 10% in
some countries, for example, while it is close to 100% for countries with the lowest
rates of maternal mortality. Within countries, similar variations exist
 Rich women generally obtain similar levels of coverage, wherever they live, but the
poor miss out. Women in the richest 20% of the population are up to 20 times more
likely to have a birth attended by a skilled health worker than a poor woman.
 Closing this coverage gap between rich and poor in 49 low-income countries would
save the lives of more than 700 000 women between now and 2015 (5).
 In the same vein, rich children live longer than poor ones; closing the coverage gap
for a range of services for children under the age of five, particularly routine
immunization, would save more than 16 million lives.

The other side of the coin is that when people do use services, they often incur high,
sometimes catastrophic costs in paying for their care.
In some countries, up to 11% of the population suffers this type of severe financial hardship
each year, and up to 5% is forced into poverty.
Globally, about 150  million people suffer financial catastrophe annually while 100 million
are pushed below the poverty line.

The other financial penalty imposed on the ill (and often their carers) is lost income. In most
countries, relatives can provide some form of financial support, however small, to family
members during periods of illness. More formal financial transfers to protect those too ill to
work are less common.
Only one in five people in the world has broad-based social security protection that also
includes cover for lost wages in the event of illness, and more than half the world’s
population lacks any type of formal social protection, according to the International Labour
Organization (ILO).
Only 5–10% of people are covered in sub-Saharan Africa and southern Asia, while in middle-
income countries, coverage rates range from 20% to 60%.

Health financing is an important part of broader efforts to ensure social protection in health.
As such, WHO is joint lead agency with the ILO in the United Nations initiative to help
countries develop a comprehensive Social Protection Floor, which includes the type of
financial risk protection discussed in this report and the broader aspects of income
replacement and social support in the event of illness (6).
HOW DO WE FIX THIS?

Three fundamental, interrelated problems restrict countries from moving closer to universal
coverage.

1. Availability of resources - Must raise sufficient funds

No country, no matter how rich, has been able to ensure that everyone has immediate access
to every technology and intervention that may improve their health or prolong their lives. At
the other end of the scale, in the poorest countries, few services are available to all.

2. An overreliance on direct payments at the time people need care. - reduce the reliance on
direct payments to finance services
These include over-the-counter payments for medicines and fees for consultations and
procedures. Even if people have some form of health insurance, they may need to contribute
in the form of co-payments, co-insurance or deductibles.
The obligation to pay directly for services at the moment of need – whether that payment is
made on a formal or informal (under the table) basis – prevents millions of people receiving
health care when they need it. For those who do seek treatment, it can result in severe
financial hardship, even impoverishment.

3. Inefficient and inequitable use of resources - improve efficiency and equity

At a conservative estimate, 20–40% of health resources are being wasted. Reducing this
waste would greatly improve the ability of health systems to provide quality services and
improve health. Improved efficiency often makes it easier for the ministry of health to make a
case for obtaining additional funding from the ministry of finance

Many low- and middle-income countries have shown over the past decade that moving closer
to universal coverage is not the prerogative of high-income countries
For example, Brazil, Chile, China, Mexico, Rwanda and Thailand
Gabon has introduced innovative ways to raise funds for health, including a levy on mobile
phone use
Cambodia has introduced a health equity fund that covers the health costs of the poor
Lebanon has improved the efficiency and quality of its primary care network

Even high-income countries now realize they must continually reassess how they move
forward in the face of rising costs and expectations.
Germany, for example, has recognized its ageing population means wage and salary earners
have declined as a proportion of the total population, making it more difficult to fund its
social health insurance system from the traditional sources of wage-based insurance
contributions.
As a result, the government has injected additional funds from general revenues into the
system.
RAISING SUFFICIENT RESOURCES FOR HEALTH

Recent estimates of the money needed to reach the health Millennium Development Goals
(MDGs) and to ensure access to critical interventions, including for noncommunicable
diseases in 49 low-income countries, suggest that, on average (unweighted), these countries
will need to spend a little more than US$ 60 per capita by 2015, considerably more than the
US$ 32 they are currently spending.
This 2015 figure includes the cost of expanding the health system so that they can deliver the
specified mix of interventions.

The first step to universal coverage, therefore, is to ensure that the poorest countries have
these funds and that funding increases consistently over the coming years to enable the
necessary scale-up.

INTERVENTIONS - Achieving the health MDGs, ensuring access to critical interventions

focusing on noncommunicable diseases is just the beginning
As the system improves, demands for more services, greater quality and/or higher levels of
financial risk protection will inevitably follow.

All countries have scope to raise more money for health domestically, provided governments
and the people commit to doing so.
There are three broad ways to do this:

1. Increase the efficiency of revenue collection

Even in some high-income countries, tax avoidance and inefficient tax and insurance
premium collection can be serious problems.
The practical difficulties in collecting tax and health insurance contributions,
particularly in countries with a large informal sector, are well documented. Improving
the efficiency of revenue collection will increase the funds that can be used to provide
services or buy them on behalf of the population.
Indonesia has totally revamped its tax system with substantial benefits for overall
government spending, and spending on health in particular.

2. Reprioritize government budgets.

Governments sometimes give health a relatively low priority when allocating their
budgets.
For example, few African countries reach the target, agreed to by their heads of state
in the 2001 Abuja Declaration, to spend 15% of their government budget on health;
19 of the countries in the region who signed the declaration allocate less now than
they did in 2001.
The United Republic of Tanzania, however, allots 18.4% to health and Liberia 16.6%
(figures that include the contributions of external partners channelled through
government, which are difficult to isolate).

Taken as a group, the 49 low-income countries could raise an additional US$ 15

billion per year for health from domestic sources by increasing health’s share of total
government spending to 15%.
3. Innovative financing
High-, middle- and low-income countries should all consider some of these
mechanisms for domestic fundraising.
The high level Taskforce on Innovative International Financing for Health Systems
included increasing taxes on air tickets, foreign exchange transactions and tobacco in
its list of ways to raise an additional US$ 10 billion annually for global health.

A levy on foreign exchange transactions could raise substantial sums in some

countries.
India, for example, has a significant foreign exchange market, with daily turnover of
US$ 34 billion. A currency transaction levy of 0.005% on this volume of trade could
yield about US$ 370 million per year if India felt this path was appropriate.

Other options include diaspora bonds (sold to expatriates) and solidarity levies on a
range of products and services, such as mobile phone calls.
Every tax has some type of distortionary effect on an economy and will be opposed
by those with vested interests.

On the other hand, taxes on products that are harmful to health have the dual benefit
of improving the health of the population through reduced consumption while raising
more funds. A 50% increase in tobacco excise taxes would generate US$ 1.42 billion
in additional funds in 22 low income countries for which data are available.

If all of this were allocated to health, it would allow government health spending to
increase by more than 25% in several countries, and at the extreme, by 50%.

Raising taxes on alcohol to 40% of the retail price could have an even bigger impact.
Estimates for 12 low-income countries where data are available show that
consumption levels would fall by more than 10%, while tax revenues would more
than triple to a level amounting to 38% of total health spending in those countries.

The potential to increase taxation on tobacco and alcohol exists in many countries.
Even if only a portion only a portion of the proceeds were allocated to health, access
to services would be greatly enhanced. Some countries are also considering taxes on
other harmful products, such as sugary drinks and foods high in salt or trans fats (7,
8).

Development assistance for health – Increasing development aid

While all countries, rich or poor, could do more to increase health funding or diversify
their funding sources, only eight of the 49 low-income countries described earlier
have any chance of generating from domestic sources alone the funds required to
achieve the MDGs by 2015. Global solidarity is required.

The funding shortfall faced by these low-income countries highlights the need for
high-income countries to honour their commitments on official development
assistance (ODA), and to back it up with greater effort to improve aid effectiveness.
While innovative funding can supplement traditional ODA, if countries were to
immediately keep their current international pledges, external funding for health in
low-income countries would more than double overnight and the estimated shortfall
in funds to reach the MDGs would be virtually eliminated.
REMOVING FINANCIAL RISK AND BARRIERS TO ACCESS
Pay On the Spot!
When this happens, the sick bear all of the financial risks associated with paying for care.
They must decide if they can afford to receive care, and often this means choosing between
paying for health services and paying for other essentials, such as food or children’s
education.

Where fees are charged, everyone pays the same price regardless of their economic status.
There is no formal expression of solidarity between the sick and the healthy, or between the
rich and the poor.
Such systems make it impossible to spread costs over the life-cycle: paying contributions
when one is young and healthy and drawing on them in the event of illness later in life.
Consequently, the risk of financial catastrophe and impoverishment is high, and achieving
universal coverage impossible.

Almost all countries impose some form of direct payment, sometimes called cost sharing,
although the poorer the country, the higher the proportion of total expenditure that is financed
in this way
The most extreme examples are found in 33 mostly low-income countries, where direct OOP
payments represented more than 50% of total health expenditures in 2007.

The only way to reduce reliance on direct payments = for governments to encourage the risk-
pooling and prepayment approach
These are based on payments made in advance of an illness, pooled in some way and used to
fund health services for everyone who is covered – treatment and rehabilitation for the sick
and disabled, and prevention and promotion for everyone.

It is only when direct payments fall to 15–20% of total health expenditures that the incidence
of financial catastrophe and impoverishment falls to negligible levels.
For example, the countries in the WHO South-East Asia and Western Pacific Regions
recently set themselves a target of between 30% and 40%.

The funds can come from a variety of sources – income and wage based taxes, broader-based
value-added taxes or excise taxes on tobacco and alcohol, and/or insurance premiums.
The source matters less than the policies developed to administer prepayment systems.
Decisions also need to be taken on pooling.

Country experience reveals three broad lessons to be considered when formulating such
policies:

1. In every country a proportion of the population is too poor to contribute via income
taxes or insurance premiums

They will need to be subsidized from pooled funds, generally government revenues.
Such assistance can take the form of direct access to government-financed services or
through subsidies on their insurance premiums.
Those countries whose entire populations have access to a set of services usually have
relatively high levels of pooled funds – in the order of 5–6% of gross domestic
product (GDP).
 2. Contributions need to be compulsory

Otherwise the rich and healthy will opt out and there will be insufficient funding to
cover the needs of the poor and sick.
While voluntary insurance schemes can raise some funds in the absence of
widespread prepayment and pooling, and also help to familiarize people with the
benefits of insurance, they have a limited ability to cover a range of services for those
too poor to pay premiums.
Longer-term plans for expanding prepayment and incorporating community and
microinsurance into the broader pool are important.

3. Pools that protect the health needs of a small number of people are not viable in the
long run

A few episodes of expensive illness will wipe them out. Multiple pools, each with
their own administrations and information systems, are also inefficient and make it
difficult to achieve equity. Usually, one of the pools will provide high benefits to
relatively wealthy people, who will not want to cross-subsidize the costs of poorer,
less healthy people.

Cross-subsidization is possible where there are multiple funds, but this requires political will
and technical and administrative capacities.
In the Netherlands and Switzerland, for example, funds are transferred between insurance
schemes that enrol people with few health needs (and who incur lower costs) to those
enrolling high-risk people who require more services.

 Half the population is covered for about half of the possible services, but where less
than half the cost of these services is met from pooled funds.
To get closer to universal coverage, the country would need to extend coverage to
more people, offer more services, and/or pay a greater part of the cost.

 none of the high-income countries that are commonly said to have achieved universal
coverage actually covers 100% of the population for 100% of the services available
and for 100% of the cost – and with no waiting lists
 Nevertheless, the entire population in all these countries has the right to use a set of
services (prevention, promotion, treatment and rehabilitation). Virtually everyone is
protected from severe financial risks thanks to funding mechanisms based on
prepayment and pooling.
 Where all but the elite are excluded from health services, moving quickly towards a
system that covers everyone, rich or poor, may be a priority, even if the list of
services and the proportion of costs covered by pooled funds is relatively small.
 Meanwhile, in a broad-based system, with just a few pockets of exclusion, the country
may initially take a targeted approach, identifying those that are excluded and taking
steps to ensure they are covered. In such cases, they can cover more services to the
poor and/or cover a higher proportion of the costs.

Ultimately, universal coverage requires a commitment to covering 100% of the population,

and plans to this end need to be developed from the outset even if the objective will not be
achieved immediately.
Removing the financial barriers implicit in direct-payment systems will help poorer people
obtain care, but it will not guarantee it
(people do not complete treatment for chronic diseases show that transport costs and lost
income can be even more prohibitive than the charges imposed for the service. Moreover, if
services are not available at all or not available close by, people cannot use them even if they
are free of charge.)

Conditional Cash Transfers - people receive money if they do certain things to improve their
health
Vouchers and Refunds - to cover transport costs
Microcredit schemes - that allow members of poor households (often the women) the chance
to earn money, which can be used in a variety of ways, including seeking or obtaining health
services.

PROMOTION EFFICIENCY AND ELIMINATING WASTE

(resources are used efficiently – having money or removing financial barriers is not enough)

Expensive medicines are often used when cheaper, equally effective options are available. In
many settings, antibiotics and injections are overused, there is poor storage and wastage, and
wide variations in the prices procurement agencies negotiate with suppliers.

Reducing unnecessary expenditure on medicines and using them more appropriately, and
improving quality control, could save countries up to 5% of their health expenditure.

Medicines account for three of the most common causes of inefficiency outlined in this
report.

Solutions for the other six can be grouped under the following headings:
■ Get the most out of technologies and health services
■ Motivate health workers
■ Improve hospital efficiency
■ Get care right the first time by reducing medical errors
■ Eliminate waste and corruption
■ Critically assess what services are needed.

Conservatively speaking, about 20–40% of resources spent on health are wasted, resources
that could be redirected towards achieving universal coverage.

Inefficiency can sometimes be due to insufficient, rather than too much, spending on health.
For example, low salaries result in health workers supplementing their income by working a
second job concurrently, reducing output for their primary employment.

It is then necessary to assess the costs and likely impact of the possible solutions.
Incentives for greater efficiency can be built into the way service providers are paid.
Fee-for-service payment encourages over-servicing for those who can afford to pay or whose
costs are met from pooled funds (e.g. taxes and insurance), and underservicing for those who
cannot pay.
Where fee-for-service is the norm, governments and insurance companies have had to
introduce controls to reduce overservicing. These controls can be costly to implement,
requiring additional human capacity and infrastructure to measure and monitor the use (and
possible overuse) of services.

In other settings, fee-for-service payments have been replaced by capitation at the primary-
care level, or by some form of case-based payment, such as diagnostic-related groups at the
hospital level.
Capitation involves payment of a fixed sum per person enrolled with a provider or facility in
each time period, regardless of the services provided.
Case-base payment is for a fixed sum per case, again regardless of the intensity or duration of
hospital treatment. Both reduce incentives for over-servicing.

However, it has been argued diagnostic-related groups (i.e. payment of a standard rate for a
procedure, regardless of how long patients stay in hospital) may encourage hospitals to
discharge patients early, then to re-admit rapidly, thereby incurring two payments instead of
one.

Paying service providers is a complex, ever-changing process and some countries have
developed a mixed payment system, believing it is more efficient than a single payment
mode. It is possible to find more efficient approaches to purchasing services, often described
as strategic purchasing.
The traditional system in which providers are reimbursed for their services (and national
governments allocate budgets to various levels of administration based largely on the funding
they received the previous year) has been termed passive purchasing.

More active purchasing can improve quality and efficiency by asking explicit questions about
the population’s health needs. Strategic purchasing is more than making a simple choice
between passive and active purchasing. Countries will decide where they can operate based
on their ability to collect, monitor and interpret the necessary information, and to encourage
and enforce standards of quality and efficiency.
Passive purchasing creates inefficiency.

The closer countries can move towards active purchasing, the more efficient the system is
likely to be.

INEQUALITIES IN COVERAGE

Government’s responsibility
They also must ensure that a range of population-based services focusing on prevention and
promotion is available, services such as mass communication programmes designed to reduce
tobacco consumption, or to encourage mothers to take their children to be immunized.

This can conflict with the drive towards efficiency, for the most efficient way of using
resources is not always the most equitable.
For example, it is usually more efficient to locate services in populated areas, but reaching
the rural poor will require locating services closer to them.
Governments must also be aware that free public services may be captured by the rich, who
use them more than the poor, even though their need may be less.

Particular attention must be paid to the difficulties women and ethnic and migrant groups face
in accessing services, and to the special problems experienced by indigenous populations.
CHAPTER : 1

WHERE ARE WE NOW?

Narin Pintalakarn (a casual labourer, earning only US$ 5 a day) - Thailand, a country that
spends US$ 136 per capita, just 3.7% of its gross domestic product (GDP)
According to doctor, medical staff do not consider who is going to pay for treatment,
however expensive it might be, because in Thailand, everyone’s health-care costs are
covered.

The three critical areas of health financing are:

1. raise sufficient money for health;
2. remove financial barriers to access and reduce financial risks of illness;
3. make better use of the available resources

What a health financing system does: a technical explanation

(Health financing is much more than a matter of raising money for health. It is also a matter
of who is asked to pay, when they pay, and how the money raised is spent)

 Revenue collection
It is what most people associate with health financing: the way money is raised to pay
health system costs.
Money is typically received from households, organizations or companies, and
sometimes from contributors outside the country (called “external sources”).
Resources can be collected through general or specific taxation; compulsory or
voluntary health insurance contributions; direct out-of-pocket payments, such as user
fees; and donations.

 Pooling
It is the accumulation and management of financial resources to ensure that the
financial risk of having to pay for health care is borne by all members of the pool and
not by the individuals who fall ill.
The main purpose of pooling is to spread the financial risk associated with the need to
use health services.
If funds are to be pooled, they have to be prepaid, before the illness occurs – through
taxes and/or insurance,
for example. Most health financing systems include an element of pooling funded by
prepayment, combined with direct payments from individuals to service providers,
sometimes called cost-sharing

 Purchasing
It is the process of paying for health services.
There are three main ways to do this.
1. for government to provide budgets directly to its own health service providers
(integration of purchasing and provision) using general government revenues and,
sometimes, insurance contributions.
2. an institutionally separate purchasing agency (e.g. a health insurance fund or
government authority) to purchase services on behalf of a population (a purchaser-
provider split).
3. for individuals to pay a provider directly for services.
Many countries use a combination.
Purchasing also includes deciding which services should be financed, including the mix
between prevention, promotion, treatment and rehabilitation.

 Labels can be misleading.

Each country makes different choices about how to raise revenues, how to pool them
and how to purchase services.
The fact that several countries decide to raise part of the revenue for health from
compulsory health insurance premiums does not mean that they all pool the funds in
the same way.
Some countries have a single pool – e.g. a national health insurance fund – while
others have multiple, sometimes competing pools managed by private insurance
companies. Even when countries have similar pooling systems, their choices about
how to provide or purchase services vary considerably.
Two systems based largely on health insurance may operate differently in how they
pool funds and use them to ensure that people can access services; the same applies to
two systems that are described as tax-based. This is why the traditional categorization
of financing systems into tax-based and social health insurance – or Beveridge versus
Bismarck – is no longer useful for policy-making.

It is much more important to consider the choices to be made at each step along the
path, from raising revenues, to pooling them, to spending them. These are the choices
that determine whether a financing system is going to be effective, efficient and
equitable

 People at the centre.

In all of this technical work, it is important to remember that people are at the centre.
On the one hand, they provide the funds required to pay for services. On the other, the
only reason for raising these funds is to improve people’s health and welfare. Health
financing is a means to an end, not an end in itself.

Today, global annual expenditure on health is about US$  5.3  trillion (1). With the burden of
communicable diseases remaining stubbornly high in some parts of the world, and the
prevalence of noncommunicable diseases – heart disease, cancers and chronic conditions
such as obesity – increasing everywhere, health costs can only continue to rise.

The countries that have come closest to achieving universal coverage do generally have more
to spend on health.
OECD countries, for example, represent only 18% of the global population but account for
86% of the world’s health spending; few OECD countries spend less than US$ 2900 per
person each year.

But it is not always the case that lower-income countries have less coverage. Thailand is a
striking example of a country that has vastly improved service coverage and protection
against the financial risks of ill health despite spending much less on health than higher
income countries. It has done this by changing the way it raises funds for health and moving
away from direct payments, such as user fees
DIRECT PAYMENTS
Depending on the country, they are levied by government, nongovernmental organizations,
faith-based and private health facilities. They are sometimes officially sanctioned charges and
sometimes unofficial or so-called “under-the-table” payments. Sometimes both co-exist.
Deductibles are the amount of expenses that must be paid out of pocket before an insurer will
cover any expenses at all.
Co-insurance reflects the proportion of subsequent costs that must be met out of pocket by
the person who is covered, while co-payments are set as a fixed amount the beneficiary must
pay for each service.

We use the term direct payments to capture all these elements. However, because the term
out-of-pocket payments is often used to capture the same ideas, we use the two terms
interchangeably

Making people pay at the point of delivery discourages them from using services and
encourages them to postpone health checks. It has been estimated that a high proportion of
the world’s 1.3 billion poor have no access to health services simply because they cannot
afford to pay at the time they need them. They risk being pushed into poverty, or further into
poverty, because they are too ill to work.

Direct payments also hurt household finances.

Estimates of the number of people who suffer financial catastrophe (defined as paying more
than 40% of household income directly on health care after basic needs have been met) are
available for 89 countries, covering nearly 90% of the world’s population.
In some countries, up to 11% of people suffer this type of severe financial hardship each year
and up to 5% are forced into poverty because they must pay for health services at the time
they receive them.
Recent studies show that these out-of-pocket health payments pushed 100 000 households in
both Kenya and Senegal below the poverty line in a single year. About 290 000 experienced
the same fate in South Africa.

Not only do out-of-pocket payments deter people from using health services and cause
financial stress, they also cause inefficiency and inequity in the way resources are used. They
encourage overuse by people who can pay and underuse by those who cannot.

POOLED FUNDS

The more people who share the financial risk in this way, the lower the financial risk to
which any one individual is exposed. In general, the bigger the pool, the better able it is to
cope with financial risks. Using the same reasoning, pools with only a few participants are
likely to experience what actuaries term “extreme fluctuations in utilization and claims”.

For a pool to exist, money must be put into it, which is why a system of prepayment is
required. Prepayment simply means that people pay before they are sick, then draw on the
pooled funds when they fall ill.

The countries that have come closest to achieving universal health coverage use tax revenue
to cover the health needs to these people, ensuring that everyone can access services when
they need them.
EXTERNAL ASSISITANCE

Investing in the development of prepayment and pooling, as opposed to simply funding

projects or programmes through separate channels, is one of the best ways donors can help
countries move away from user fees and improve access to health care and financial risk
protection.

These agencies have also started to determine how their external financial assistance can
support, rather than hinder this process.
This is reflected in the adoption of the Paris Declaration on Aid Effectiveness and the
subsequent Accra Action Agenda.
The International Health Partnership and related initiatives seek to implement these principles
into practice in the health sector, with the aim to mobilize donor countries and other
development partners around a single, country-led national health strategy.

Financing for universal health coverage

Financing systems need to be specifically designed to:

■ provide all people with access to needed health services of sufficient quality to be effective
■ ensure that the use of these services does not expose the user to financial hardship.

In 2005, the World Health Assembly unanimously adopted a resolution urging countries to
develop their health financing systems to achieve these two goals, defined then as achieving
universal coverage. The more that countries rely on direct payments, such as user-fees, to
fund their health systems, the more difficult is it to meet these two objectives.

ON THE PATH TO UNIVERSAL COVERAGE (CHINA AND USA)

CHINA

In April 2009, the Chinese government announced plans to provide “safe, effective,
convenient and affordable” health services to all urban and rural residents by 2020.
If fully implemented, the reform will end market based mechanisms for health that were
introduced in 1978.
Prior to then, the government had offered basic but essentially free health-care services to the
entire population, but the new market-based approach resulted in a major increase in direct
payments – from little more than 20% of all health spending in 1980 to 60% in 2000 –
leaving many people facing catastrophic health-care costs. The new approach also meant that
hospitals had to survive on patient fees, which put pressure on doctors to prescribe medicines
and treatment based on their revenue-generating potential rather than their clinical efficacy.
The government took steps to address these issues. The New Cooperative Medical Schemes,
initiated in 2003 to meet the needs of rural populations, and
the Urban Residents Basic Medical Insurance scheme, piloted in 79 cities in 2007, are at the
heart of the latest reforms.
The government aims to reduce dependence on direct payments and increase the proportion
of the population covered by formal insurance from 15% in 2003 to 90% by 2011, and to
expand access to services and financial risk protection over time

USA

The recent health financing reforms in the United States will extend insurance coverage to a
projected 32  million previously uninsured people by 2019.
Numerous strategies will be used to achieve this goal.
Private insurers will no longer be able to reject applicants based on health status, for example,
and low-income individuals and families will have their premiums subsidized.
Many low- to middle-income countries have also made significant progress developing their
financing systems towards universal coverage.

At the other end of the income scale, 27 OECD countries cover all their citizens with a set of
interventions from pooled funds, while two others – Mexico, with its Seguro Popular
voluntary health insurance scheme, and Turkey, with its Health Transformation Programme –
are moving towards it.

The Republic of Korea,

for example, started its journey in the early 1960s.
 Early investment focused on building infrastructure, but the programme expanded
significantly in 1977 with vigorous high-level political support.
 Steady expansion of employer-based health-care schemes followed, starting with
companies employing more than 500 staff, moving down the corporate chain to
companies employing just 16, and more recently to those with only one full-time
employee.
 Civil servants and teachers were brought into the scheme in 1981 and played a key
role in raising awareness in the rest of the population.
 This, in turn, helped put universal coverage at the heart of the political agenda in
1988, when enrolment in social welfare programmes was a core issue in the
presidential campaign.
 In 1989, coverage was extended to the remaining population – the indigent, the self-
employed and rural residents
 Since then, the system has sought to expand both the range of services offered and the
proportion of the costs covered by the insurance system.

SUSTAINING EXISTING ACHIEVEMENTS

Ghana, for example, began after independence in 1957 to provide medical care to its
population free at the point of service through government Funded facilities. It abandoned
this system in the early 1980s in the face of severe resource constraints, before introducing a
form of national insurance more recently.

Chile, too, has gone through different phases. After running a statefunded national health
service for 30 years, it opted in 2000 for a mixed public/ private approach to health insurance,
guaranteeing universal access to quality treatment for a set of explicitly defined conditions.
The number of conditions has expanded over time and the poor have been the major
beneficiaries.
Costs continually rise faster than national income, putting pressure on governments to
restrain costs.

UNIVERSAL COVERAGE: THE 2 PRONGS

To learn where we stand today, we must focus on the two key elements of universal health
coverage described earlier:
1. financial access to crucial health services
2. the extent of financial risk protection provided to the people who use them

Direct Payments - This indicates a widespread lack of financial risk protection – a deficiency
that affects low-income countries most, but is by no means limited to them. In six of the
OECD countries, more than 1% of the population, or almost four million people, suffers
catastrophic spending, while the incidence exceeds five per 1000 people in another five

Medical Debt is the principal cause of personal bankruptcy in the USA. Harvard researchers
in 2008 concluded that illness or medical bills had contributed to 62% of bankruptcies the
previous year (52). Many of these people had some form of health insurance, but the benefits
offered were insufficient to protect them against high out-of-pocket expenses.

This provides clues on the extent to which financial barriers prevent people from using
services. - Information on the proportion of children fully immunized with DTP3 and the
proportion of births attended by skilled health personnel is widely reported.
In 16 countries, fewer than 40% of women deliver babies in the presence of a skilled health
worker capable of saving their lives in the event of a complication.
In seven countries, DTP3 immunization coverage is lower than 40%.
This suggests that inequalities in coverage are substantial across countries and greater for
services that require more infrastructure and skilled workers (such as childbirth) than for
other interventions (such as vaccinations)
Bigger discrepancies occur in access to skilled health workers during child delivery than in
childhood immunization. With few exceptions, the richest people in even low-income
countries enjoy access to services similar to that available in high-income countries.

In other words, poor people in poor countries are not only largely excluded from these
services, but when they do receive care, it is likely to be of a lower quality than that provided
to richer people.

The International Labour Organization (ILO) collates information on the right to paid sick
leave in the event of illness as well as on the right to paid maternity leave.

Financial protection against work incapacity due to illness or pregnancy is generally available
only to formal-sector workers. Typically in low-income countries, more than 50% of the
working-age population works in the informal sector without access to income replacement at
these times.

MAKING THE RIGHT CHOICES

It is a constant challenge to balance priorities: funds often remain scarce, yet people demand
more and the technologies for improving health are constantly expanding.
Such conflicts force policy-makers to make trade-offs in three core areas:
1. the proportion of the population to be covered
2. the range of services to be made available
3. the proportion of the total costs to be met.

To get closer to universal coverage, the country would need to extend coverage to more
people, offer more services and/or pay a greater part of the cost from pooled funds.

In European countries with long-established social health protection, this “current pooled
funds” box fills almost the entire space. But in none of the high-income countries that are
commonly said to have achieved universal coverage is 100% of the population covered for
100% of the services that could be made available and for 100% of the cost, with no waiting
lists.

Nevertheless, everyone in these countries has access to a set of services (prevention,

promotion, treatment and rehabilitation) and nearly everyone is protected from severe
financial risks thanks to prepayment and pooling of funds.
The fundamentals are the same even if the specifics differ, shaped by the expectations of the
population and the health providers, the political environment

Many countries setting out on the path to universal coverage begin by targeting groups
employed in the so-called formal sector because these groups are more easily identified.
But there are downsides to this targeted approach: it can lead to two-tier systems and make
conditions worse for those left uncovered; and by achieving partial success, it can slow the
impetus for more fundamental reform.

MOVING FORWARD

Universal coverage is the best way to attain that right. It is fundamental to the principle of
Health for All set out more than 30 years ago in the Declaration of Alma-Ata (primary health
care – attainment of health for all)

In preparing a path towards universal coverage, there are three points to remember:

1. Health systems are “complex adaptive systems” in which relationships are not
predictable and components interact in unexpected ways. Participants in the system
need to learn and adapt constantly, often in the face of resistance to change (69). Even
though we offer various routes to universal coverage, countries will need to expect the
unexpected
2. Planning a course towards universal coverage requires countries to first take stock of
their current situation.
Is there sufficient political and community commitment to achieving and maintaining
universal health coverage? This question will mean different things in different
contexts but will draw out the prevailing attitudes to social solidarity and self reliance.
A degree of social solidarity is required to develop universal health coverage, given
that any effective system of financial protection for the whole population relies on the
readiness of the rich to subsidize the poor, and the healthy to subsidize the sick. Put
another way, every society has a notion of social justice that puts a limit on how much
inequality is acceptable.
3. Policy-makers need to decide what proportion of costs will come from pooled funds
in the longer run, and how to balance the inevitable trade-offs in their use – trade-offs
between the proportion of the population, services and costs that can be covered.
For those countries focused on maintaining their hard-won gains, continual
monitoring and adaptation will be crucial in the face of rapidly developing
technologies and changing age structures and disease patterns.