Healthcare Financing
Brigadier General Dr Zulfiquer Ahmed Amin
M Phil, MPH, PGD (Health Economics), MBBS, Fellow (AIIMS, Delhi)
Article 25 of the Universal Declaration of Human Rights 1948 recognizes Health as a right…
It is fundamental human right and… a most important world-wide social goal.
Alma Ata Declaration-1973
1.2 Article 15(a) of the Constitution of the People's Republic of Bangladesh Guarantees Health
Care Services as a fundamental right to all citizen and entrusts the State and the Government
for its realization.
Three key health financing system functions
Resource Mobilization
Countries need to consider three issues:
1.What are the sources of funding for health? Funding can come from domestic sources
(e.g., citizens and businesses within the country) and external sources (e.g., donor
governments or agencies).
2. How are funds collected? Funds for healthcare can be collected through taxes, health
insurance schemes, at the point of service (e.g., out-of-pocket payments), and other
mechanisms.
3. Who collects the funds? Resources for health are often collected by the government or
public agencies, but they may also be collected by private health insurance schemes and
directly by providers.
Progressive Funding:
Progressive Funding means that the amount that any one individual contributes towards
health services as a percentage of income, is higher for those with higher incomes, and lower
for those with lower income.
Proportional Funding:
Reflects a situation where everyone contributes the same percentage of their income towards
health services, irrespective of whether their income is low or high.
Regressive Funding:
Funding method that place a higher financial burden on the poor to the point that people
with lower income are paying a higher percentage of their income than those with higher
incomes; and reflects inequality in finance or inequitable financial contributions (eg Fixed
Amount).
Pooling
Risk pools are a risk management tactic usually used by insurance companies as protection
against catastrophic events. Pooling ensures that the risk related to financing health
interventions is borne by all the members of the pool. Pooling helps promote equity, as
those with greater ability to pay and those with less risk of getting sick subsidize poorer and
higher risk individuals. In order to work, the pool needs to be large and diverse.
Purchasing
The design of purchasing mechanisms are based on the following four issues:
1. What services should be purchased?
Often, governments or health insurance providers will identify a benefits package that
specifies the health services they will partially or fully pay for.
2. Who should services be purchased for?
Governments often try to reduce out-of-pocket payments by subsidizing or providing free
health services for different segments of the population.
3. Higher-income individuals may not be eligible for such subsidies but may choose to enroll
in other schemes, such as private health insurance.
Why is Healthcare Finance Important
Models of Healthcare
Bangladesh: Mixed type of financing
Healthcare Financing in Bangladesh
Bangladesh has among the lowest Current Health Expenditures (CHE) in the world, and
health financing is dominated by out-of-pocket expenditure (OOP) which currently
constitutes 74% of CHE and has been rising. The population of Bangladesh has almost no
financial risk protection for health, with less than 1% of CHE allocated to health insurance.
Extremely high OOP and limited risk protection mean that 24.6% of households face
Catastrophic Health Expenditure each year (Ref: MZ Hasan et el. Health Policy & Planning,
2023).
Health Expenditures in Bangladesh
Health care financing in Bangladesh consists primarily of
- Household out-of-pocket payments;
-Government expenditure by the Ministry of Health and Family Welfare and other ministries
and local governments;
- Voluntary Health Insurance;
- Own financing by nongovernment organizations (NGOs), autonomous bodies, and private
companies; and
- Support from development partners through NGOs.
Funding flows in the health system of Bangladesh
A Snapshot of Health Financing in Bangladesh
In Bangladesh, annual health budget is 5.0% of the total budget in FY 2023-24 (WHO
Recommend: 12-15%), which is only 0.84% of GDP (WHO Recommends: 5%,
which is lower than the average (3.8%) in South East Asia (SEA) region, and far below the
world (8.5%).
The consequences of excess OOP expending are enormous. Some households may not utilize
formal healthcare, some may sell their movable and immovable properties to manage the
treatment costs, some may need to ration food items, and thus become malnourished. OOPE
may affect education, causing a vicious cycle of poverty.
A household faces CHE, when its out-of-pocket (OOP) spending on healthcare exceeds 10
percent of their total income. Each year, 4.5% of population in Bangladesh fall into poverty
due to high OOP healthcare spending.
Sell movable
CHE & immovable
properties
(Catastrophic Health expenditure)
Low
productivity Pushed into
& no return poverty
from poverty
Compromise
nutrition and
education
Vicious Cycle of Poverty due to CHE
Future Strategy for Healthcare Financing in Bangladesh (2012-2032)
Challenges Facing Healthcare Finance
Innovative Ideas
- Institute of Health Economics at Dhaka University found that levying a monthly fee of Tk
21.5 on each active mobile phone subscriber can generate financial protection of Tk 500,000
for at least 60,000 cancer patients. This minimum charge can be used to provide health
protection for patients of other leading non-communicable diseases as well.
- CMED (Cloud-Based Medicine) Health is using AI-driven health kits and trained paramedics
to provide preventive healthcare through doorstep health screening in various districts of
Bangladesh. Their comprehensive services can be availed at only Tk 100.
Healthcare Financing Strategies
1. Raise more funds
2. Spend efficiently.
3. Reduce Out Of Packet Payment and increase prepayments.
4. Strengthen Health Financing Function
- Collect financial contributions efficiently and fairly
- Pool these contributions so that the risk of having to pay for care is shared by all.
5. Adopt country-specific innovative financing ideas.
6. Ability to spend allotted health budget
HW
A person, aged 55 years was diagnosed to
have Diabetes Mellitus (DM). His life
expectancy as per age and gender
stratification is 75 years. Disability Weight of
DM is 0.60. With treatment Metformin, he
lived at health state of 0.5 for 10 years and
then died. Another person suffering from
DM, was treated with Insulin and lived at
health state of 0.8 for 9 years. Compare the
DALY averted and QALY gained by both
interventions.
