Topics

Definition of health care finance

Objectives/Goals of health care finance
Health care triangle
Functional components of health care finance
Funding sources, contribution mechanism and
collection agents in health care finance
Definition of Health Care
Finance The way in which
money is raised to
fund health activities
as well as how it is
used

sum of money to
buy various health
products and health
services
Objectives of Health Care
Finance

Sustainability
of health
system

the
preservation or
enhancement
of health
dana kes 2007
 ng The provision
d i THIRD PARTY

A
n INSURER OR and financing of
Fu

llo
PURCHASER
health care can

ca
ti
be simplified as

on
an exchange or
transfer of
resources
delivery

POPULATIO
N
PROVIDE
COVERAGE R
 F
I
N
A
i ng
d
THIRD PARTY
N

A
n INSURER OR
Fu

llo
PURCHASER
C

ca
ti
I

on
N
G

delivery

POPULATIO
N
PROVIDE
R
 THE HEALTH CARE TRIANGLE
delivery
CITIZEN PROVIDER

BETWEEN CITIZEN AND

on
PROVIDER
fu

ati
n

oc
di
ng

all

THIRD PARTY
INSURER OR
PURCHASER

DIRECT PAYMENT : TRANSACTION FOR A GOOD OR

SERVICE

THE CITIZEN ( THE FIRST PARTY ) PAYS SOME

MONEY
THE PROVIDER ( THE SECOND PARTY ) DELIVERS
HEALTH CARE SERVICES
 THE HEALTH CARE TRIANGLE
delivery HEALTH CARE SYSTEMS HAVE
CITIZEN PROVIDER
DEVELOPED IN WHICH A THIRD
PARTY OFFERS PROTECTION TO A
on
fu

ati
n

oc POPULATION AGAINST THE

di
ng

all

THIRD PARTY FINANCIAL RISK OF FALLING ILL

INSURER OR
PURCHASER

IT CAN BE A PRIVATE OR PUBLIC

ORGANIZATION
THE THIRD PARTY
- COLLECT MONEY FROM THE CITIZEN ( WHOLE
POPULATION OR SUBGROUP )
- ALLOCATE MONEY TO PROVIDER ( REIMBURSE )
FOR HEALTH CARE SERVICES FOR THE CITIZEN
FUNCTIONS OF HEALTH CARE SYSTEMS

FINANCING PROVISION

REVENUE COLLECTION
PERSONAL HEALTH
SERVICES
FUND POOLING

NON PERSONAL
PURCHASING HEALTH SERVICES

SOURCE : adapted from Murray and Frenk (2000)

REVENUE COLLECTION FUND POOLING
 Mechanism

Taxes Direct and indirect taxes

Social Insurance *

Medical Saving Individual savings accounts into which

Account people are either required to or given
incentives to, deposit money. The
money must be spent on personal
medical expenses
Out of Pocket Patients /clients required to pay :
-Part of the costs (cost sharing) or
-All of the costs
-the collection agent is usually the
provider : physician , hospital etc
DIFFERENT FUNDING METHODS

TAXES

INDIVIDUAL , HOUSEHOLDS
AND FIRMS such as personal
DIRECT TAXES
income tax , corporate profit
taxes , property taxes

TRANSACTIONS AND
COMMODITIES : value-added
INDIRECT TAXES taxes , sales taxes , excise taxes
( cukai ) , import,export taxes
DIFFERENT FUNDING METHODS
SOCIAL HEALTH INSURANCE

COMPULSORY

RELATED TO INCOME ( payroll taxes ) AND SHARED

BETWEEN THE EMPLOYEES AND EMPLOYERS

CAN ALSO COLLECTED FROM SELF EMPLOYED PEOPLE

( calculated based on declarations of income or profit )
DIFFERENT FUNDING METHODS
PRIVATE HEALTH INSURANCE

VOLUNTARY

PAID BY AN INDIVIDUAL

SHARED BETWEEN THE EMPLOYEES AND EMPLOYERS

PAID WHOLLY BY THE EMPLOYER

DIFFERENT FUNDING METHODS
MEDICAL SAVINGS ACCOUNTS

INDIVIDUALS SAVINGS ACCOUNTS INTO WHICH PEOPLE

ARE EITHER REQUIRED TO , OR GIVEN INCENTIVES TO
OR DEPOSIT MONEY

THE MONEY MUST BE SPENT ONLY ON PERSONAL

MEDICAL EXPENCES
DIFFERENT FUNDING METHODS
OUT OF POCKET PAYMENTS

PATIENTS /CLIENTS REQUIRED TO PAY :

-PART OF THE COSTS OR
-ALL OF THE COSTS

THE COLLECTION AGENT IS USUALLY THE PROVIDER :

PHYSICIAN , HOSPITAL ETC
DIFFERENT FUNDING METHODS
LOANS , GRANTS AND DONATIONS

USUALLY FROM :
-FOREIGN AND DOMESTIC NON GOVERNMENTAL
ORGANIZATIONS ( NGOs )
- CHARITIES
-FOREIGN GOVERNMENTS AND COMPANIES
Thank you