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Learning from experience: health-care financing in low- and middle-income countries

Date: Tuesday 30 October 13.30–15.00
Source: Forum 11
Authors: Diane McIntyre, Associate Professor, Public Health and Family Medicine, Health Economics Unit, University of Cape Town, South Africa


Health-care financing is once again prominent on the global health policy agenda. The difficulty that low- and middle-income countries have in providing for the health-care needs of their populations remains a major problem. At the same time, the current focus on poverty reduction, as reflected in the Millennium Development Goals (MDGs) and other international initiatives, has spurred a growing emphasis on the need for health-care financing mechanisms that protect the populations of these countries from the potentially impoverishing effects of health-care costs.

This paper reviews health-care financing in low- and middle-income countries as it relates to three main functions: 1) Revenue collection, which concerns the sources of funds, their structure and the means by which they are collected. 2) Pooling of funds, which addresses: the unpredictability of illness, particularly at the individual level; the inability of individuals to mobilize sufficient resources to cover unexpected health care costs; and, consequently, the need to spread health risks over as broad a population group and period of time as possible. 3) Purchasing, which transfers pooled resources to health-service providers so that appropriate and efficient services are available to the population.

Enormous challenges face low- and middle-income countries confronted with the need to improve or replace their existing health-care financing system. Yet, several countries with limited financial resources have managed to improve the health of their populations by introducing innovative health-care financing mechanisms and health- care provision, as well as by encouraging health-fostering interventions that take place, or stem from, outside the health system. By improving revenue collection, risk-pooling and purchasing and by learning from the experience of other low- and middle-income countries and adapting it to their own circumstances, all resource-poor countries can improve their health-care financing systems and make them more equitable, efficient and sustainable.

There is still a paucity of success stories, and therefore real scope for future research to document how the three health-care financing functions actually operate in countries, as well as identifying factors that have contributed to success.