7 health economics i

Introduction to Health Economic

Alemayehu Desalegne (MPH) June 7, 2012

Health Service Management and Policy

(COMH 501) Addis Ababa University

College of Health sciences School of Medicine

DefinitionsBasic concept

Scope of health economicsHealth and development

Learning Objective• Introduction to economics, Health economics, definition

• The basic economic questions/ Basic economic concepts

• Costs, Efficiency, Marginal analysis

• Market structures

– Demand for health care

– Health care supply

• Financing health care

2Health Economics AAU/SPH

Economic Definition• The discipline of economics deals with use of scarce

resources to satisfy human wants and needs how best to use the resources available.

• Economics is a social science that studies how individuals and organizations in society engage in;

– The production, Distribution and Consumption of goods and services.

• We have two major divisions of economics: namely,

– Microeconomics:

– Macroeconomics

3Health Economics : How do individuals make

economic decisions AAU/SPH

Economic Definition• Goods: are the things which are produced to be

sold.

• Services: involve doing something for the customers but not producing goods.

4Health Economics : How do individuals make

economic decisions AAU/SPH

• Health care expenditures is increasing from time to time significantly

• Health care industry is rapidly evolving

• Advance in medical technology and drugs are dramatically improving patient care

– But, these improvements are costly

• Health Industry highly dependent on research and development (R&D)

• Long-run key to survival

– Be an efficient provider of high-quality health care


Can We Apply The Tools Of Economics To Study The Health Care Sector?

• Resources are limited, In poor countries this limitation is absolute

• What we “want” is unlimited

• Individuals make decisions everyday that reflect how they value health and mortality risks

• Many of these decisions involve observable market choices

• These decisions involve implicit tradeoffs between risk and money

• Different agencies are required to compare the costs of proposed regulations/ interventions to the benefits, which are often in terms of lives saved.


Can We Apply The Tools Of Economics To Study The Health Care Sector?

• Health economists are concerned with determining

– What medical services to produce

– How they should be produced

– Who should receive them

• In this course, we will see how the tools of economics can be applied to the health sector to derive valuable insights about our health care system


Scope of Health Economics• Health economics in its widest sense deals with several different broad

areas of resource allocation

• The best way to finance health care systems (e.g.. public or private finance)

• The study of supply and demand for health care (the study of health care markets)

• Valuing health and assessing the relationship between health and its social and economic determinants (analysis of the relationship between health status and income);

• An aid to management of health services (needs assessment)

• Microeconomic evaluation (concerned with comparing the resource implications of alternative ways to deliver health care e.g. an assessment of the efficiency of new health technologies such as MRI scans)

• Other??8Health Economics AAU/SPH

Basic Economics concepts • Economic logic is based on the concepts of

– Scarcity of resources

– Opportunity cost and

– Choice /trade off

Scarcity choice Costs

• Choices are usually made at the margin;

– We choose a “little” more or a ”little” less of something and the choices you make are influenced by incentives


• Opportunity Cost:

– “The value of forgone benefit which could be obtained from a resource in its next-best alternative use.”


Paediatric Care (# Children

Treated)

Care of Elderly (# of Elderly

Treated)

Opportunity Cost of Treating Children in

Terms of Elderly Patients Forgone

0 1 2 3 4 5

30 28 24 18 10 0

0 2 6

12 20 30

•Efficiency:

• Efficiency – maximizing benefit for resources used

– Technical - meeting a given objective at least cost

– Allocative - producing the pattern of output that best satisfies the pattern of “consumer wants”


•Costs: The total amount of money it takes to produce an item (to pay for ALL Factors of Production).

•Revenues – the total amount of $/birr a company or the government takes in.

•Profit– the difference between Total Costs and Revenues.

•Costs

Fixed Costs – the amount of money a business MUST pay each month or year (like rent and Capital expenses).

Do not vary in short term

Cost incurred at zero production

Variable Costs – the amount of money a business pays that changes over time (Labor and Raw Materials).

Vary with output at constant rate

Total Cost - Sum of fixed and variable costs

Average Cost - Total cost no of units of output

Marginal Cost - Additional cost of producing one extra unit of output12Health Economics AAU/SPH

• Example: The total cost of producing one pen is $5 and the total cost of

producing two pens is $9, then the marginal cost of expanding output by one unit is $4 only (9 - 5 = 4).

• The marginal cost of the second unit is the difference between the total cost of the second unit and total cost of the first unit. The marginal cost of the 5th unit is $5. It is the difference between the total cost of the 6th unit and the total cost of the, 5th unit and so forth.


Units of

output

Total Cost ($)

Marginal Cost ($)

1 5 5 2 9 4 3 12 3 4 16 4 5 21 5 6 29 8

Importance of Marginal Cost - Case of Detecting Cervical Cancer

No of Tests

Total Cases Detected

Additional cases

Detected

Total Cost (Birr)

Average Cost per

Case

Marginal Cost per

Case

1

2

3

4

5

6

65.9469

71.4424

71.9004

71.9385

71.9417

71.9420

65.9469

5.4955

0.4580

0.0382

0.0032

0.0003

77,511

107,690

130,111

148,116

163,141

176,331

1,175

1,507

1,810

2,059

2,268

2,451

1,175

5,492

49,150

469,534

4,724,695

47,107,214

The relationship between health and economy

HealthEconomy

15

A. Impact of Economy on Health

A poor nation can not afford improved health.

Poor budget allocation to health

Poor individuals have low health seeking behaviors

Economy determines nations population growth, nutrition and environmental conditions and education

There is correlation between economic development and high life expectation

Example:IMR (poor countries) = 215/’000IMR (rich countries) = 42/’000

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Growth on its own does not guarantee improved health status

development but it depends on: How growth takes place

How benefits are distributed

How benefits are reinvested

How public spending is used

Who controls resources in the family and their priority

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• Economic growth had also unfortunate consequences;

Disease of affluence (cancer, heart diseases, depression…)

Developing countries are also facing “double burden” of

diseases

Earlier : malaria, TB, etc

New occurring : cancer, heart diseases, etc

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B. Impact of Health on the Economy

• Healthier population are more productive

– Skill level

– Increased life expectancy leading to decrease in time preference and increased investment

• Effect on population structure is hard to say

– Good health can lead to prolonged life.

– But prolonged life can either lead to productive working life or a high ratio of dependent and financial burden.

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• Health is fundamental to wellbeing of the individual

• Generally there is correlation between economic development and health status

• Health of a nation is the critical determinant of economic growth rather than the commonly considered paradigm in which economic conditions are the major determinants of health status

• Health care is central to well‐being and a prerequisite for individual and national progress.

• Data shows that countries that have good national health indicators have a greater economic progress and development

20

Demand For Health Care

Alemayehu Desalegne (MPH) June 7, 2011



College of Health sciences School of Public Health

Session Objective

• Measuring Demand: Elasticity

• Explain the law of demand

• Distinguish between changes in demand and changes in quantity demanded

• The Purpose of Demand Analysis

• Understand how supply and demand interact to determine equilibrium price and quantity

• Brainstorming Question: First what is market?

Health Economics MPH AAU/ SPH 22

Demand• Demand is the amount of a good (service) buyers want to

purchase at different prices during same stated period of time.

• Demand = Need + ability and willingness to buy a good.

What is the distinction between need and demand?

• Need is some one subjective idea and money is not a factor, but demand is objectively observable behavior in the market

• Demand is expressed only by spending money


Needs• Normative need: Normative need are those services

determined by Experts to be essential for a specific need or for a specific population group, example is immunization, and clinical care etc.

• Felt need: Subjective view of the community, which may or may not be based on desired requirements , affecting health planning. example request for a hospital while primary health care unit is enough.

• Expressed need: - Acted on felt need is expressed need, which depended upon of economic, geographic, social or psychological factors


Related Goods and Services

• Normal Goods: are goods for which demand goes up when income is higher and for which demand goes down when income is lower.

• Inferior Goods: are goods for which demand falls when income rises.

Related Goods and Services

• Substitutes are goods that can serve as replacements for one another; when the price of one increases, demand for the other goes up. Perfect substitutes are identical products.

• Complements are goods that “go together”; a decrease in the price of one results in an increase in demand for the other, and vice versa.

Factors affecting demand for a good or service are: Income

Own price

Tastes and preferences

Price of related goods(Complementary, Substitutes)

Expectation of future prices and income

Income distribution

Wealth distribution

Other particular factors , etc


Law of Demand: The law of demand states the quantity demanded of a

good/service is inversely related to its price, other things being equal (ceteris paribus).

D x=f(P x),Ceteri paribus

Demand Curve: is graphic presentation of the demand schedule.


example


Price per disposable glove in Birr

Quantity of disposable glove demanded per day

Reference point

123456

60 3020151210

ABCDEF

Q1Q2

P2

P1

30

Elasticity of demand – Elasticity “responsiveness of one variable to changes in another.”

– Elasticity provides a way of measuring how sensitive demand is

to the determinants.

– Elasticity of demand measure the responsiveness of demand of a

good to a change in determinants

– When cost of production is raising the cost the firm will pass the

increment cost to the consumer price


– Price elasticity demand for the product ;

Proportionate change in demand to proportionate change in

price

– Price elasticity of the substitute

– Some measures of demand elasticity

Price elasticity of demand

Cross elasticity demand

Income elasticity demand


1. Price elasticity of demand Price elasticity of demand Price elasticity of demand = % change in quantity % change in price Ed= Q%/ P%

Percentage change quantity of demand to one percentage change in price

Ed; the coefficient of price elasticity of demand, is negative number, but the minus sign is dropped from the number and treated as positive.


– Different type of price elasticity of demand;

• Price inelastic= demand is not particularly sensitive to change in price

• Price elastic=demand is particularly sensitive to change in price


Coefficient of Ed Type of Ed Shape of the Demand Curve

Ed=0 Perfectly inelastic Dv is vertical

0<Ed<1 Inelastic Dv is steeper

Ed=1 Unitary elastic Dv is 45 degree angle

1<Ed<infinity Elastic DV is Flatter

Ed=Infinity Perfectly elastic DV is Horizontal

• Graphically;

Quantity

Price Ed infinity

1<Ed< infinity

Ed =1

Ed=o

0<Ed<1

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Example: When the price of heart operation rose by 15% and

the quantity fall about by 10%

A. What is the coefficient of Ed

B. What is the type of Ed type?

C. Describe what the coefficient value of the Ed means


AnswersA. -10% /15%= -0.66B. InelasticC. With the percentage change in price there is lesser change in

quantity

Class activity: When the price of heart operation rise by 10% the demand fall from

800 to 600. Calculate the price elasticity of demand and give your explanation on the coefficient of Ed


2. Income elasticity demand (YED) • Measure demand react to change in income

YED= % change in quantity % change in income

Unlike price elasticity which is always negative with some exception when the goods are inferior , income elasticity is always positive with the exception when the goods are inferior


2. Income elasticity demand(YED) • This is because when the good is inferior people

switch over to the superior good by leaving the inferior good


3. Cross elasticity of demand(XED)

– Measure how demand react to change in price of other goods

XED = % change in quantity

% change in price of other good

– If the price elasticity of demand is positive it indicate the goods

are substitutes

– If it is negative, then the goods are complement


The purpose of analysis of demand in health care • Is to determine those factors which, on the average , most

affect a persons utilization of medical services.

• The better our understanding of those factors, the better we will be able to explain variation in utilization among population groups and among areas

• To determine those factors which on the average, most affect a persons utilization of medical services

• Demand analysis seeks to identify which factors are most influential in determining how much care people are willing to purchase


Determinant of the demand for medical care• Factors affecting a patient’s demand for medical care

– Actual and perceived illness or desire for prevention– Individual's age– Gender– Martial status– Number of person in the family– Levels of education

• Cultural-demographic factors are important. Such factors are not subject to sudden changes, nor are they generally impacted by public policy

• Medical care demand is secondary to the demand for health

Demand of health care

• Substitute: Herbal and Non-Western Medicine

– Price of substitute rises demand more medical care

• Complements: Drugs, if can’t afford the drugs may not bother to go to doctor.

– Price of a complement rises demand less medical care

• Demand will depend on how long it takes to get to the doctor and if there are waiting times

Demand of health care

Michel Grossman’s Model Demand determinants

Prepayment factorsE.g. private insurance, tax based health

Insurance, national health system, managed care, co-payment

Health care resources factors

E.g. supply, access,acceptability

Demand

Individual client factors [age, sex, education, occupation]

Environmental factors[physical, economic,

social, cultural]

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• According to Grossman the demand for health has two reasons;

– Pure conception aspect-health is desired b/c it makes people feel better

– Pure investment aspect-it increases the number of health days available to work and to earn income


Thank you!

Any questions?

Supply For Health Care

Alemayehu Desalegne (MPH) June 2012




Session Objective

• Measuring supply and supply elasticity

• Explain the law of supply

• Distinguish between different factors affecting supply for health care

• Understand how supply and demand interact to determine equilibrium price and quantity

• Market/ Market failure


Supply Supply is the amount of a good producers/sellers are willing to

produce and sell at different prices.

Factors Influencing the supply of a good or service:

– Own price

– Production (inputs) cost

– Production technology

– price of substitutes

– Future expectations / Price expectations

– Market structure/organization

– Government policy (eg. Taxes and subsidies)

– Number of firms in industry


Explanation of some of the factors affecting the decision of supply;

Cost of production

dominant factor

When production cost is high relative to price producer will produce little

Price of substitutes

If the price of one substitute rises, this will decrease the supply of other substitute

Market organization

Monopolized market tend to raise the price at each level of the out put


Law of supply states that the quantity supplied of a good is

positively related to its own price, ceteris paribus.

Sx= f(Px), Ceteris paribus

Supply Curve: is graphic presentation of the supply schedule.


Price

Quantity

The supply curve

Why sloping upward?

s

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Elasticity of supply • Price elasticity of supply(PES): measure how sensitive

quantity supplied to change in price

PES= % change in quantity supplied

% change in price of the good

PES= Q%/ P%

• PES is always positive


The supply of health care

• Peculiarities of the supply of health care is complicate

Complexity of Product:

Health care is not a simple product, but a related bundle of goods and services directed towards the same objective of improving health.

In many cases these goods and services are joint products and the supply and costs of one are not independent of the others.

They also have a quality dimension that is difficult to measure objectively


The supply of health care…

• Complexity of organization:

– commercial, private non-profit and public institutions are found side by side supplying health care to the same, or overlapping, markets.

• Little is known of the determinants of the behavior of non-commercial institutions specialized input markets

• The key inputs of the health care industry are produced in 'dedicated markets', of which the most important (professional labor) is often tightly controlled by the professionals


• Because of its special features, measuring and modeling

supply can be as difficult as measuring and modeling

demand

• Very little is known about how different types of supplier

behavior

• So more attention has been devoted to measuring costs

within the health care market and inputs into health care

production


Health care need

• Estimation of the required type and volume of resources

and services to provide an optimum standard of a given

community based on the professional judgment

• It doesn’t consider the price

• The health need determined in two ways, from the

professionals perspective and individual own perspectives


Need determination

C 1 and C4 are right decisions

What individual think?

Need care Doesn't need care

What doctors

would say?

Person need care C 1

problem, the most worry some

Person doesn’t need care

Problem, e.g.. hypochondrias C4

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Health care need

• Estimation of the required type and volume of resources

and services to provide an optimum standard of a given

community based on the professional judgment

• It doesn’t consider the price

• The health need determined in two ways, from the

professionals perspective and individual own perspectives


• What is this?

Demand

Supply

Need

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The Relation Between Demand, Need , Supply

How to raise the demand to ward the need?

• It can be done by the following

Advertisement

Incentive

Free service E.g.. vaccines

Putting scary messages or tax ( e.g. on cigarette) .etc


Market Equilibrium • Market price is set by the interaction of demand supply

• Equilibrium means a state of equality or a state of balance between market demand and supply.

• A price at which excess demand equals zero

• At the equilibrium price there is no net tendency for price to change.

• Equilibrium– Excess demand exists when, at the current price, the quantity

demanded is greater than quantity supplied.

– Excess supply exists when, at the current price, the quantity supplied is greater than the quantity demanded.

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63

Putting Demand and Supply Together

• When there is EXCESS DEMAND for a good, price will tend to

rise.

• When there is EXCESS SUPPLY of a good, price will tend to fall.

• When excess demand equals zero, price must be the

equilibrium price, and we say the market is in equilibrium.

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• Economists are interested in the explaining equilibrium prices.

• Market price serves as the adjustment mechanism to move markets to

equilibrium.

• Price changes in response to the existence of excess demand or excess

supply.

• Changes in demand and changes in supply lead to changes in

equilibrium prices and quantities.

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66

Market failures in health care

Necessary Conditions For competitive Market

1. No barriers to entry or exit (large number of independent buyers and sellers)

2. Consumer bears costs and receives benefit

3. Consumer has perfect information on cost and benefits

Why healthcare markets “fail”

Uncertainty

Imperfect information and knowledge imbalance

Monopoly

Externalities

Equity

Information asymmetry

i Lack information on cost, effectiveness, benefits etc.

i Not physically/mentally able to make choice.

i Leads to “agency relationship”.

i Potential for “supplier-induced demand”.

Monopoly

•MONOPOLY = one producer who determines price and quantity

•OLIGOPOLY = few producers who collude to set price. Engage in non price competition

Externalities

Costs and/or benefits of actions by one party which affect other parties

Externalities exist wherever a transaction affects an uncompensated party

Positive eg. Vaccination

Negative e.g. Antibiotic Resistance

Health Economics AAU/SPH

72

Negative Externality

• Infectious disease

• antibiotic resistance

• Environmental degradation (vehicle emissions)

• Tobacco & passive smoking

THE “INSURANCE” MARKET

Is a means by which a third party will pay for care out of a central fund that individuals have paid into; either by premium or taxation.

Is the “market” solution to uncertainty concerning the timing and magnitude of expenditure.

Health Care Financing

June 8, 2012




Learning Objective

– Describe what is health care financing

– Explain activities in health care financing

– Explain Different kinds of health care financing

– Demonstrate the strength and weakness of different kinds

of health care financing

– Health care financing in Ethiopia context


• Financing health care has evolved from personal payment at the time of service to financing through health insurance [prepayment] by employer/ employee at the place of work and governmental financing through social security or general taxation.

• Money is the mother's milk of health care; however, money does not automatically produce efficient, equitable, and effective health care.

• More health spending does not necessarily mean better health outcomes.


– Health Care Financing involves the three basic functions:

• To generate sufficient and sustainable resources for a health

care system (revenue collection)

• To use these resources optimally (optimal purchasing)

• To insure that everyone has financial access to health services

(pooling)


Revenue collection

– Is the way the health system raises money from households, businesses and external sources.

– It is concerned with the Sources , Structures and Means by which funds are collected.


Pooling of funds and sharing of risks

– Is the collection and management of financial resources

so that large unpredictable individual financial risks

become predictable and are distributed among members

of the pool.

– Prepayment allows pooling of funds.


Pooling of funds and sharing of risks


Purchasing

– Refers to the many arrangements for buyers of health

care services to pay health care providers and suppliers.

– Purchasing is the transfer of pooled resources to service

providers on behalf of the population for which the

resources are pooled.

– In short it is a mechanism to secure services from public

and private providers


Factors influencing health care Financing –Demographic changes: may lead to variation in health service coverage

• The older, younger, ANC and Under five year need higher health costs

–Economic Recession: Low or negative economic growth has an implication on health care financing

–Raising expectation: Expectation of the consumer affect the financing as middle category population need high technology


Factors influencing health care Financing Concern about Equity

Addressing the health care service with in the concept of equity PHC principle affect the health care financing

Disease Pattern ChangeDisease pattern change may result due to change in

average income level or change in social development

Efficiency In order to use the limited resource in efficiently also

affect the health care financing


Factors influencing health care Financing

Displacement effect

The is the condition when one fund resource replace one the other

fund resource

This consequence is not necessary undesirable, but if it is more

efficient than the previous its more important

Wider effect of health sector

The activity of health sector may have spill over effect in economy

as whole,

This would have effect in health care financing


Principles of health care financing Cost recovery: the cost incurred in the provision of health

care should be recovered

– Patients cover a substantial proportion of the cost of provision

– It can be sustainable but does not consider ethical and social values of health

Cost sharing: the cost of health care service need to be shared with different groups of the society

– The patient usually have nominal participation

– Can address the question of equity


Forms of cost sharing include

Co-payments: Copayments are fixed-dollar fees that a health plan enrollee is required to pay for a covered service (e.g., $10 per office visit $3 per prescription drug).

Co-insurance: A percentage of the charge that the consumer must pay. It refers to the freed percentage of covered expenses shared by a health plan and an enrollee after the deductible requirement has been met

Deductibles: An amount the consumer must pay out-of-pocket before coverage begins, usually applied for a specific time period, such as yearly.


Criteria for choosing the financing system

Viability and ease of using the system

Revenue generating ability

Effect on service provision

Effect on equity

Participation in decision making


Source of Funding 1. Public source

Direct government budgeting

• National health service and public health service system

• The public sector is both the financing and provider health services

Social health insurance sponsored or mandated by the government

– Characterized by independent/or quasi independent insurance fund.

– Reliance on mandatory earmarked payroll contribution

– The government is the financer but may or may not be the provider

Community financing

Health services are paid for through contribution of the fund


Source of Funding 2. Private insurance

Direct payment by the household

Fee for service and other types of payments

Private voluntary health insurance

Indirect individual payment

Employer based health insurance

Payment by international or local organization/employer


Source of Funding 3. External financing

Foreign aid or development loans


Health service financing in Ethiopia• Health services in Ethiopia are primarily financed by four sources:

– Government sources;

– Grants and loans from donors

– Nongovernmental organizations

– Private contributions.

• Ethiopia’s National Health Accounts (NHA) show that total health expenditure had grown significantly from $230 million in 1995/96 to $1.2 billion in 2007/08.

• The country’s per capita health expenditure has also increased over the last decade, from $4.09 in 1995/96 to $16.1 in 2007/08

04/11/2023 AAU/SPH Health Economics MPH 93

• International initiatives:

– Currently many international organizations are emphasizing health insurance as a financing option

– The WB and IMF aggressively promoted charging user fees and required low income countries to cut back social spending

– The Bamako Initiative emphasized community participation

– According to the Bamako Initiative fees are to be retained in the collecting facility, and reinvested in quality improving services

– Bamako Initiative also incorporated the establishment of Drug Fund


• The government of FDRE initiate and start implementing Health Care Financing Strategy in1998

– Financial support was secured from USAID for five year project (2008 – 2013)

• Objectives

– To generate resources for the health sector

– To foster equity in health care delivery

– To improve sustainability, quality, and coverage of health services

– To improve efficiency of health services


The health care financing reform was targeted;• To answer:

– How should health services be financed? (Cost recovery? Cost sharing?)

• To generate sufficient and sustainable resources for a health care system (revenue collection)

– How should health funds be allocated for the provision of health care services? (Relative share of different components of the health care service)

– How could we reduce inefficiencies?

– How should the finance component of the health system be organized?


• HCF Strategies

– User Fee Systems

– Improving Budgeting and Resource Allocation

– Enhancing the Role of the Private Sector in Health Care

– Health Insurance Schemes

• Reform components

– Revenue Retention and utilization

– Fee waiver and Exemption scheme

– Establishment and operation Governing Boards

– Outsourcing of non clinical services.

– Establishment and operation Private wing

– User fee setting and revision04/11/2023 AAU/SPH Health Economics MPH 97

Health Insurance• Health insurance schemes are increasingly recognized as preferable

mechanisms to finance health care provision.

• Other alternative such as cost recovery strategies and user fees have been criticized on grounds that it affects access to care.

• Key concept

– Premium

– Fee for Service

– Reimbursements

– Health service


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99

Health Insurance Model

INSURERGovernment or Private(for profit ot not for profit)

Health Care ProviderGovernment and / or Private

Providers(For Profit or Not for) profit

CustomerIndividual and/ or EmployerMaking regular payment to a

fund

TPA

Regulator

Health Service

Premium

Reimbursement

ADVERSE SELECTION

•Insurance may cover more high risk than low risk individuals.

•If too many high risk cases are covered, there will be excessive payouts, the insurance company will lose money, premiums will have to rise further, and the insurance company will eventually close.

Factors affecting Demand for health Insurance

IMPORTANCE OF ADVERSE SELECTION IN “POOLING” HEALTH RISK

1. Variation in individual cost extremely wide

2. Significant proportion of variance in individual cost is predictable

3. High cost of insurers acquiring knowledge

“SOLUTION” TO ADVERSE SELECTION

h exclusions and benefit ceilings

h subsidisation of those “in need”

h publicly financed health care systems

MORAL HAZARD

h Once insured against “X”, “X” more likely to occur.

h Full insurance means money cost facing consumer = zero.

h Leads to “excess” demand - benefits from resources used for providing health care less that the benefits foregone from an alternative use.

“SOLUTION” TO MORAL HAZARD

h Use of co-payments or user charges

h Incentives to demand care from selected low-cost providers

h Combining insurer with provider

h Use of primary care as “gateway” to services

Future sources/concerns in HCF• Tax Funding:

– No African countries has reached the target of 15% of government budgets to health as agreed in Abuja declaration

• Devote less than 5% of their budgets• Main constraint external debt• Conflicts – more budget to defense• Inadequate debt relief

• Donor funding:– Can address health service equity constraints if donor funds are

made available through pooling mechanisms– It is unreliable source of funding: we need sustainable domestic

source of finance


Thank you!

Any questions?

7 health economics i

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Transcript of 7 health economics i