Risk pooling in health care financing

Insurance is the transference of risks from individuals. Its main purpose is to share the financial risk associated with. Witter september 2004 health, nutrition and population hnp discussion paper this series is produced by the health, nutrition, and population family hnp of the world banks human development network hnp discussion paper. Yet the implication of such health financing mech anisms is that the healthy will end up paying for some or all of the health care services used by the sick. The world health organization defines a wellfunctioning health financing system as one that 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. Rand research explores the effects of corporate and government health care financing policies on such groups as patients, businesses, hospitals, and physicianproviders. The purpose of pooling is to spread financial risk across the population so that no individual carries the full burden of paying for health care. Social health insurance shi is a form of financing and managing health care based on risk pooling. The pooling of risk is fundamental to the concept of insurance. Witter, title risk pooling in health care financing. Why are riskpooling and risksharing arrangements necessary. Strategy on health care financing for countries of the western pacific and southeast asia regions 5 supporting adequate, sustainable, equitable and effective health financing to improve health outcomes is one of the most important goals of the world health organization. A crucial concept in health financing is that of pooling.

Risk pooling is a form of risk management practiced by the health industry especially insurance companies. Myanmar health financing system assessment english the. Value for money, reaching the poor world bank, washington dc, may 1415 2001 revised november 2001 phone fax. Witter centre for health economics university of york york yo10 5dd united kingdom report prepared for the world bank workshop resource allocation and purchasing in health. The risk pooling and prepayment functions are essential. Pooling is the health system function whereby collected health revenues are transferred to.

These countries have expanded various forms of prepayment and pooling to increase financial risk protection, particularly for the poor. Jan 31, 2018 therefore, health financing reforms with better risk pooling such as prepayment schemes, communitybased financing, and social health insurance should be seen as a key strategy for achieving and universal health coverage and reducing the financial barriers to health care in lowincome and lowermiddleincome countries, such as africa, south. This chapter focuses on two of the key functions of a health sector financing system. The implications for health system performance peter c. Risk pooling is an important concept in supply chain management. Revenue collection concerns the sources of funds, contribution structures, and the means by. Because health spending is skewedthat is, a small share of consumers account for a large share of total health spendingif a risk pool attracts a disproportionate share of unhealthy individuals, premiums will be higher than they would be if the. This publication risk pooling in health care finance. Definition of health care financing health financing system is, therefore, more than merely an approach to mobilize funds for health care.

The objective of pooling is to reduce the outofpocket price the patient pays when. The determination of how an organization will pay for loss events in the most effective and least costly way possible. Health care systems may be financed in various ways, including through government funding, taxation, outofpocket payments, private insurance, and donations or voluntary aid. Health care financing is one of the core components of health systems. Risk pooling in health care financing citeseerx mafiadoc. Pooling ensures that the risk related to financing health interventions is borne. Special attention will be made on provisions of the aca that impact insurance markets, financing, healthcare costs, and payment models. Prepaid revenues for health services can come through various sources such as taxes, compulsory insurance contributions payroll taxes, voluntary health insurance premiums, and external funding. A health insurance risk pool is a group of individuals whose medical costs are combined. The implications for health system performance article pdf available october 2004 with 905 reads how we measure reads. Pooling is the health system function whereby collected health revenues are transferred to purchasing organisations. Formal definition of risk pooling pooling is the health system function whereby collected health revenues are transferred to purchasing organizations. Health care financing and delivery in developing countries.

Ensure evaluation of products and services at each stage. The findings, interpretations and conclusions expressed in the paper are entirely those of the authors, and do not represent the views of the world bank, its executive directors. National health expenditures are derived from government and nongovernment sources and are used to finance a wide array of programs and services. The executive board of who and the fiftyeighth world health assembly have. The second function in health care financing is the pooling of risks and funds, and we talk here about risks on the one hand and funds on the other because they are slightly different. The strategy on health care financing for countries of the western pacific and southeast asia regions 20062010 is intended to translate this important policy direction into regional, national and subnational actions. Pooling is the health system function whereby collected health revenues are transferred to purchasing organizations. Liberia aims to create a sustainable health financing system to guarantee equal access to quality healthcare and ensure financial protection for all. Risk pooling is the most fundamental concept in health care financing.

As a result, health insurance premiums reflect the expected health care costs of the risk pool. In insurance, the term risk pooling refers to the spreading of financial risks evenly among a large number of contributors to the program. The world health organization who considers health financing models with highrisk pools, such as health insurance and prepaid schemes, to be a promising means for achieving universal healthcare. Policies which focus on establishing separate social health insurance. Most health sector reform measures attempt to address health financing issues such as mobilization of funds, distribution of financial risks, allocation and utilization of services, and provider payment incentives. Pdf why are riskpooling and risksharing arrangements. Although larger risk pools are typically more stable, a large risk pool does not necessarily mean lower premiums. Although all health financing functions play an important role in ensuring financial protection, risk pooling and prepaymentwhether through taxes or individual premiumsplay the central and often the most poorly understood roles. This week we will focus some time on the affordable care act aca which is a very complex piece of legislation. A userfriendly foldout table provides the international experience in the performance of these functions in terms of feasibility, equity, e. Myanmar health financing system assessment english abstract. Risk pooling in health care finance 18578 words bartleby. A userfriendly foldout table provides the international experience in the performance.

The nhp aims to improve the delivery of health services and financial protection for myanmar people through substantial investments. Health care financing an overview sciencedirect topics. Financing health in highincome countries the main lesson from the experience of highincome countries with health care. Risk pooling is the spreading of the financial risk associated with the need to use and pay for health services, rather than to be fully borne by the individual who falls ill. Pooling ensures that the risk related to financing health interventions is borne by all the members of the pool and not by each contributor individually. Whos health financing team works with countries to design and implement health. Funds are paid into a common pool to cover the health care needs of those insured by the pool. Health financing is the function of a health system concerned with the mobilization, accumulation and allocation of money to cover the health. Therefore, health financing reforms with better risk pooling such as prepayment schemes, community based financing, social health insurance need to be seen as a key strategy in achieving uhc and reducing financial barriers to health care, higher utilization but lower outofpocket expenditure, in low and lower middle income countries. Health financing involves not only methods of raising money for health care, but also allocation of those funds.

When pooling is fragmented, this sets a limit on the extent to which. Although that is a simple, basic concept, this article explains the complexities of risk pooling, with special attention to policies that promote greater risk pooling and policies that decrease pooling, separating the risks. To make progress towards universal health coverage, countries should increase the share of prepaid revenues in the health system, and minimise. Brief overview of risk pooling within the sa medical schemes market in 1997, the private health financing policy document published by the national department of health ndoh. Therefore, health financing reforms with better risk pooling such as prepayment schemes, communitybased financing, and social health insurance should be seen as a key strategy for achieving and universal health coverage and reducing the financial barriers to health care in lowincome and lowermiddleincome countries, such as africa, south. Risk financing involves the identification of risks. The role of risksharing mechanisms in finance health care. No matter how small the initial budget for health care, it should include a system to evaluate the. Insurance markets are far from meeting the conditions that make competitive markets efficient. Benefits are based on community preferences and they may include preventive health care services, such as immunization. For example, third party payment structures and risk pooling, to name a few. In these, government performs the financing and riskpooling fu in that system government performs all of the basic functions listed in the article. Essay on risk pooling in health care finance 18568 words.

The role of risksharing mechanisms in finance health care and. The purpose of pooling is to spread financial risk across the population so that no. It uses as its starting point the world health organization resolution calling for health care financing systems to provide universal coverage and financial protection for citizens. Yet the implication of such health financing mech anisms is that the healthy will end up paying for. The key factor is the average health care costs of the enrollees included in the pool. Sep 08, 2008 in these, government performs the financing and riskpooling fu in that system government performs all of the basic functions listed in the article. Revenue collection and pooling arrangements in financing. As countries grow economically, pooled health financing in national health systems and health insurance comes to dominate revenues from user payments.

In general, the larger the risk pool, the more predictable and stable the premiums can be. Myanmar health financing system assessment english. Risk pooling in health care finance kiran charania april 26, 2012 risk pooling is a mechanism where revenue and contributions are pooled so that the risk of having to pay for health care is not borne by each contributor individually. Who risk pooling for universal health coverage uhc. Pooling ensures that the risk related to financing health interventions is borne by all the members of the pool and not by each contributor. This is determined by both the overall level of prepaid resources and the structural arrangements architecture of pooling. The implications for health system performance, year 2004. The who defines riskpooling as the accumulation and ma n. Risk pooling refers to the collection and management of. A desciptive framework for countrylevel analysis for health care financing arrangements. Such mechanisms can be initially relatively simple and administratively easy to handle.

Pooling is a core function of health financing policy. Witter, sophie pooling is the health system function whereby collected health revenues are transferred to purchasing organizations. Shi pools both the health risks of the people on one hand, and the contributions of individuals, households, enterprises, and the government on the other. The government takes a phased approach to universal health coverage, focusing on incremental interventions toward domestic resource mobilization, pooling, and strategic purchasing. Pooling may be carried out by a wide variety of public and private agencies such as national ministries of health, health insurance funds public, commercial, or noncommercial, nongovernmental or. Myanmars national health plan nhp for 20172021 has laid out the vision of achieving universal health coverage uhc by 2030. There is competition for funds in any system, and the way in which money is allocated. Dec 21, 2019 risk pooling is the spreading of the financial risk associated with the need to use and pay for health services, rather than to be fully borne by the individual who falls ill. Definition of health care financing health financing system is, therefore, more than merely an approach to mobilize funds for health care who definition of health financing. Pooling revenues and reducing fragmentation world health. Pooling risks means that all those people who face the risk of ill health that is essentially everybody, we all do can benefit by pooling their resources and. Apr 30, 2015 formal definition of risk pooling pooling is the health system function whereby collected health revenues are transferred to purchasing organizations. How health insurance in the individual market works. Risk pooling suggests that demand variability is reduced if one aggregates demand across locations because as demand is aggregated across different locations, it becomes more likely that high demand from one customer will be offset by low demand from another.