Compare: Funding

Joint Learning Network for Universal Health Coverage

The Joint Learning Network for Universal Health Coverage systematically documents the reforms of its member countries and other countries that have expanded health coverage through demand-side financing. The case studies contained in these pages are brief, comparative and modular in nature, describing the key highlights and technical features of each program.


Compare various dimensions of country reform efforts using our interactive tool.


Program Primary source of funding Secondary source of funding Contributing Populations Types of Contributions Funding
Vietnam: Compulsory and Voluntary Health Insurance Schemes
  • General government revenues
  • None
  • Formal Sector
  • Premiums

The central Vietnamese government is responsible for financing the bulk of the cost. Provincial governments, however, also contribute a smaller percentage of funds to the program. Poor beneficiaries do not pay premiums and are exempt from copayments. The entire cost of the scheme, 4.5% of minimum wage, is covered by revenues from the state budget.

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The central Vietnamese government is responsible for financing the bulk of the cost. Provincial governments, however, also contribute a smaller percentage of funds to the program. Poor beneficiaries do not pay premiums and are exempt from copayments. The entire cost of the scheme, 4.5% of minimum wage, is covered by revenues from the state budget.

Funding for Vietnam’s various universal coverage schemes varies greatly by population segment. The following presents an overview of each program’s financing:

Compulsory program (CHI)

  • Pensioners: 4.5% of monthly allowances, paid by VSS with subsidies from state budget.
  • Meritorious persons, etc.: 4.5% of minimum wage, paid from state budget.
  • Formal sector workers and civil servants: 4.53% salary, 1.5% paid by worker, 3% by employer.
  • Insurance for the Poor: 4.5% of minimum wage, paid from state budget.
  • Voluntary program (VHI): 4.5% of minimum wage.

Note that when the insurance program was initially introduced, there was no cost sharing. In 1998, cost sharing was introduced, with a 20 percent coinsurance rate but no deductible. In 2005, the 20 percent coinsurance rate was eliminated, only to be reintroduced again since January 1, 2010. Copayment is exempted for some groups, such as people of merit.

Estonia: Estonian Health Insurance Fund
  • Payroll Tax
  • Formal Sector
  • Government Employees
  • Premiums
  • Co-payments

Estonian health care is funded through a Social Health Insurance regime where contributions are paid by salaried and self-employed workers, who contribute 13% of their wages to the system. The earmarked payroll tax is collected by the Estonian Tax and Customs Board. The tax board then transfers the health contribution to the EHIF. This system has a strong element of solidarity, as 46% of enrollees are non-contributing members and are subsidized by those who contribute. All enrollees are entitled to the same benefits package.

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Estonian health care is funded through a Social Health Insurance regime where contributions are paid by salaried and self-employed workers, who contribute 13% of their wages to the system. The earmarked payroll tax is collected by the Estonian Tax and Customs Board. The tax board then transfers the health contribution to the EHIF. This system has a strong element of solidarity, as 46% of enrollees are non-contributing members and are subsidized by those who contribute. All enrollees are entitled to the same benefits package.

The Estonian Health Insurance Fund is the primary financing entity. It is responsible for pooling funds, contracting with service providers, reimbursing health services and pharmaceuticals, and reimbursing sick leave and maternity benefits. In 2006, approximately 20% of EHIF expenditures went toward cash benefits such as health related work incapacity compensation, as well as dental care and prescription reimbursements. In the same year, approximately 70% of expenditures went toward payment of services such as preventative and curative health and pharmaceuticals and medical devices. EHIF also funds disease prevention and health promotion programs.

Funds are disbursed to the four regional EHIF offices on a per capita basis based on the number of insured in the region. The per capita payments for primary care are adjusted based on the age structure of the region, but payments for all other health services are not adjusted. Once the regional EHIF offices receive their funds, they have some flexibility in their allocation. This is especially useful, as the planning of health service provider contracts is conducted by the regional offices.

The EHIF is liable for all of its obligations, so it cannot declare bankruptcy. However, if social health insurance revenues are lower than budgeted, the state becomes responsible for the shortfall. Also, if the government establishes prices such that the EHIF cannot meet its contractual obligations, then the state becomes responsible. In order to ensure solvency, the EHIF has a cash reserve to manage daily cash flows, a legal reserve to decrease the risk of macroeconomic changes, equivalent to 6% of the budget, and a risk reserve to ensure that health insurance obligations are met, equivalent to 2% of the budget. EHIF revenues have exceeded expenditures every year since the reforms except 1999, when an economic crisis significantly reduced revenues.

Estonian Health Financing Flows

Out-of-Pocket payments have been the most rapidly increasing sources of financing, increasing from 7.5% of total health financing in 1995 to 24% in 2006. OOP payments flow mainly toward cost sharing for EHIF benefits, payments for services outside of the EHIF benefits package, payments to non-EHIF providers, and to informal payments. However, the primary reason for the increase in OOP has been the dual increase in pharmaceutical use and dental care expenditures that are not a part of the benefits package.

Table 1: Share of Primary Sources of Health Care Financing (1995-2006)

Source of financing19952000200520062007
Public89.876.476.773.775.6
Taxes (state and municipal)12.410.410.511.211.4
Social health insurance77.466.066.262.564.2
Private7.523.323.025.623.3
OOP Payments7.519.720.423.821.9
Private health insurance0.01.00.31.10.3
Other0.02.62.30.71.1
External sources2.70.30.30.61.1

Source: Ministry of Social Affairs, 1999-2006

There are no copayments for family doctor visits, but other services have small copayments. Prescription drugs normally have a deductible as well as a coinsurance of percentage. Flat small copayments are charged on family doctor home visits, outpatient care visits, and hospital bed days. There has been a gradual move toward an elimination of patient cost sharing for primary care. Outpatient specialist care has a maximum consultation fee, but providers can choose to charge any amount up to the maximum. Inpatient care providers can charge a per diem rate (maximum is set by EHIF) for up to ten days. However, inpatient child care, pregnancies, and emergency care are exempt from this per diem rate.

Colombia: General System of Social Security in Health
  • Payroll Tax
  • General government revenues
  • Employer contributions
  • Formal Sector
  • Government Employees
  • Informal Sector
  • Premiums
  • Co-payments

Two different funding streams for insurance currently exist within the Colombian health system. The Contributive Regime (CR) relies on wage contributions for its sustainability. The Subsidized Regime (SR), however, relies on three distinct funding mechanisms.

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Two different funding streams for insurance currently exist within the Colombian health system. The Contributive Regime (CR) relies on wage contributions for its sustainability. The Subsidized Regime (SR), however, relies on three distinct funding mechanisms.

Under the CR, employees and the self-employed (informal workers above a set income threshold) pay 12.5% of their salaries to EPSs, which are then responsible for transferring the funds to FOSYGA. In turn, FOSYGA remits a UPC back to the EPS to cover the premium of the insured. The UPC initially adjusted risk based on three variables: age, gender, and geographic location. The premium and risk adjusters are modified yearly by the National Board of Health Social Security (CNSSS). By 2006 the board had introduced risk adjusters for End-Stage Renal Disease and other adjusters have been introduced since. When patients receive services, the EPS handles all payment transactions with the exception of copayments. From 2007 to 2008, CR revenues increased by 12.75%, which indicates an expansion of the CR and a move toward greater coverage.

There are three primary funding mechanisms for the SR: 1) national transfers from general taxation providing for 48% of SR resources, 2) solidarity contributions from the CR that are transferred by FOSYGA providing for 40%, and 3) district and municipal efforts providing for 11% of SR funds. National transfers are pooled under the Subsidized Regime’s System of General Participation (SGP) which is responsible for allocating resources to the different districts and municipalities across the country. The solidarity contribution from the CR is transferred by FOSYGA directly to the municipalities. The municipality then transfers the UPC to an EPSS of the patient’s choosing. In 1997 there were over 200 EPSS, but by 2005 there were only 43 EPSS, of which 28% were private for profit, 16% were private not-for-profit, 14% were public, 36% were community based, and 6% were for indigenous populations. The subsidized regime UPC is approximately 60% of the contributing regime UPC, which is in line with the reduced number of services offered within the SR. As with EPSs, the EPSS is responsible for payment transactions with service providers for their members.

Finally, supply-side subsidies to public hospitals/providers and public health programs are paid for by national transfers from general taxes. These funds flow into the SGP, which is then responsible for their disbursement.

Indonesia: Jamkesmas
  • General government revenues
  • None
  • All populations
  • Premiums
  • Co-payments

The Jamkesmas scheme is funded by the central government from general tax revenue. Beneficiaries are not responsible for premium payments nor are they charged a copayment at the time of visit.

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The Jamkesmas scheme is funded by the central government from general tax revenue. Beneficiaries are not responsible for premium payments nor are they charged a copayment at the time of visit.

A paramount question of importance in Indonesia is the solvency of the Jamkesmas program. Increasing utilization of health care will concurrently increase the cost of health insurance, particularly for the poorest populations covered by Jamkesmas as currently there is no co-payment provision within the program. While utilization of Puskesmas services has increased, the capacity of local service delivery may not be able to keep pace with increasing demands without further collaboration with private primary health care providers.

Currently, it is the responsibility of the local government to finance the gap between the actual cost of insuring its population and what the central government provides via Jamkesmas reimbursements. Without further support for the poorest localities, this growing responsibility will become more problematic. The central government recognizes this problem, and in order to continue to strive towards universal coverage, it is considering how it might introduce strategies to develop further approaches to co-finance service delivery at the local level.

The proposed funding requirements for the operational costs of preventive and promotive service delivery is under active consideration within the parliament at this time and known as the “BOK” fund.

Kyrgyz Republic: Mandatory Health Insurance Fund (MHIF)
  • Payroll Tax
  • General government revenues
  • Formal Sector
  • Government Employees
  • Informal Sector
  • Co-payments

Premiums for the Mandatory Health Insurance Fund (MHIF) are paid by different entities depending on the status of the enrollee. The payroll tax is set at 2% for those employed and is payable by employers. Farmers pay 5% of their land tax as their contribution to the health fund. Finally, pensioners and the unemployed have their contribution paid for by the pension and unemployment insurance funds. This contribution equals 1.5 times the minimum wage. The MHIF is the sole purchasing agency for health services within the Kyrgyz health system.

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Premiums for the Mandatory Health Insurance Fund (MHIF) are paid by different entities depending on the status of the enrollee. The payroll tax is set at 2% for those employed and is payable by employers. Farmers pay 5% of their land tax as their contribution to the health fund. Finally, pensioners and the unemployed have their contribution paid for by the pension and unemployment insurance funds. This contribution equals 1.5 times the minimum wage. The MHIF is the sole purchasing agency for health services within the Kyrgyz health system.

Table 2: Population coverage and funding sources

Population groupPayroll tax rate, base and sourceComment
Employed population groups
Employees in formal sector2% payroll contribution by employerThere is an upper limit on contribution payments: earnings exceeding 120-times the monthly minimum wage are not subject to payroll tax payments (i.e., earnings portions above 12,000 soms)
Civil servants and public enterprises2% payroll contribution by employer
Self-employed2% of total enterprise income
Private farmers5% of land tax (only after 2001)
Non-employed population groups
Pensioners1.5x minimum wage from pension fun to MHIF
Registered unemployed1.5x minimum wage from unemployment fund
Children under 16 and students under 18Republican budget
Persons receiving social benefitsRepublican budget

Source: Jakab, M.

Copayments are regulated in the State Guaranteed Benefits Package (SGBP). The SGBP was the primary instrument used to address the problem of informal payments. Copayments were introduced in two oblasts starting in 2001 and were henceforth expanded gradually to the entire country through 2004, when all oblasts conformed to the same system. The destination of the copayment revenues is regulated; 20% can go toward complementing personnel salaries and 80% must go towards inputs such as medicines, supplies, and food. The majority of copayments are used for the purchase of medicines and supplies, functioning as additional revenue for hospitals to fund their variable costs. Copayments vary with insurance status, exemption status, case type (delivery, surgery, medicine), and referral status.

Populations with high expected use of the health care system qualify for two copayment exemptions. The first is based on social characteristics and was intended to target vulnerable groups such as war veterans, the elderly, and the disabled. The second is based on groups with certain medical conditions with high externalities such as tuberculosis, AIDS, syphilis, and polio. Both of these groups are exempt from any fees. Hospitals are also required to set aside 10% of all copayment funds in order to cover services for the very poor that are uninsured. This process was initiated voluntarily by health providers to support the most vulnerable populations.

Mali: Mutuelles
  • General government revenues
  • Member contributions
  • Informal Sector
  • Premiums
  • Co-payments

The intent of the social protection policy in Mali is to ensure fairness among the three systems in terms of the care that is covered, the government’s financial contribution, and the population, except of course for the indigent and retirees. The priority source for Mutuelle system resources will be membership dues. However, to boost the development of Mutuelles and to make coverage of the health risk universal for the majority of Malians in the interest of fairness, the government will make a financial contribution that aims to remedy the fact that the Mutuelle members have only a modest ability to contribute. This government contribution will be through a Mutuelle Support Fund.

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The intent of the social protection policy in Mali is to ensure fairness among the three systems in terms of the care that is covered, the government’s financial contribution, and the population, except of course for the indigent and retirees. The priority source for Mutuelle system resources will be membership dues. However, to boost the development of Mutuelles and to make coverage of the health risk universal for the majority of Malians in the interest of fairness, the government will make a financial contribution that aims to remedy the fact that the Mutuelle members have only a modest ability to contribute. This government contribution will be through a Mutuelle Support Fund.

Thus, the pilot phase will be funded from two sources: membership dues and the Mutuelle Support Fund financed by the government, the technical and financial partners, and the local and territorial governments. Membership dues will be used to pay expenses incurred at the community health center level. By contrast, the Support Fund will be used to pay for expenses in the referral facilities, which are the referring health centers and the hospitals, in order to fund investments made for implementing the strategy.

Table 2: Financing planned under the social protection system in Mali, 2010

SystemFinancingShareCoverage rate
Mandatory Health InsuranceEmployer and employee contributionSalary-based:
Government: 4.48%
Civil servants, MPs, workers: 3.06%
Private sector employers: 3.50%
Retirees: 0.75%
70% of outpatient care
80% of hospitalization costs
RAMEDGovernment and territorial grantsGovernment: 65%
Territorial governments: 35%
100%
MutuellesGovernment grants/Territorial governments and Mutuelle member duesGovernment: 50% of dues
Mutuelle member: 50% of dues
In general:
70% of outpatient care
80% of hospitalization costs

Source: Ministry of Social Protection

The different members of the AMO thus pay the same membership dues (except for retirees), and the members and their beneficiaries are eligible for the same baskets of care. A trial period of six consecutive months after the right to benefits begins is mandatory, which is not the case for RAMED.

RAMED provides the right to direct and full payment of the costs of care. The government’s contribution to funding RAMED is written into the finance law.Theoretically, the contribution from the territorial governments should also be included in their annual budgets.

Rwanda: Mutuelles de Sante
  • Member contributions
  • General government revenues
  • Donor funding
  • Formal Sector
  • Informal Sector
  • Premiums
  • Co-payments

Rwanda has developed a comprehensive financing framework for health care that includes risk pooling, cross-subsidies, and substantial support from donors, NGOs, and tax-generated funding from the formal sector. In the Mutuelle system, funding is comprised of annual member premiums organized on a per household basis, with an annual payment of 1000 Rwandan francs (equivalent of approximately US$1.80) per family member, and a 10% service fee paid up-front for each visit to a health center or hospital.

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Rwanda has developed a comprehensive financing framework for health care that includes risk pooling, cross-subsidies, and substantial support from donors, NGOs, and tax-generated funding from the formal sector. In the Mutuelle system, funding is comprised of annual member premiums organized on a per household basis, with an annual payment of 1000 Rwandan francs (equivalent of approximately US$1.80) per family member, and a 10% service fee paid up-front for each visit to a health center or hospital. When a citizen cannot pay the premium up-front, microfinance institutions from community banks (Banques Populaires) provide individual loans to be repaid within a year of disbursement with 15% interest. Due to the high degree of poverty in Rwanda, the poorest individuals, as determined by community leaders, along with those infected with HIV/AIDs, are not required to pay the membership or service fees, rather their fees are subsidized by district and nationally organized solidarity funds financed primarily by the central government and external aid partners. A total of 1.5 million individuals enrolled in Mutuelles are subsidized by these funds.

Rwandan Health Financing Sources

Funding for the insurance scheme is coordinated at the central, district, and local levels. At the central level, two bodies exist to coordinate funding: the National Health Insurance Fund and the National Guarantee Fund of the Mutuelles. Financing for both these Funds comes primarily from external aid partners and the Central Government, though MMI, RAMA, and Mutuelle branches provide a small percentage of the financing as well. A substantial amount of funding for the National Funds comes from 16 bilateral and multi-lateral donors and external aid partners: approximately $700 million per year or a third of the central government’s total health spending. Though donor funds are generally funneled through the national Funds, some donors channel funds through NGOs. These funds are largely earmarked for specific purposed such as Tuberculosis, Malaria, and HIV/AIDS, rather than the national care system. The ear-marking of funds and diversion through third parties creates administrative challenges to the central government and often skews the focus of the health system, by placing an emphasis on disease-specific care.

The National Funds allocate and disburse funds to the sector and district level Mutuelle solidarity funds through block transfers to the district and sector level Mutuelle bodies as well as separately providing other subsidies to sector level solidarity funds for coverage of indigent Mutuelle members. The National Funds also reimburse two national referral teaching hospitals and one psychiatric hospital for care of Mutuelle members who are referred by district hospitals.

At the district level, a district Mutuelle acts as a risk-pooling mechanism for all Mutuelles in the district and acts to reimburse the costs of district hospital care for the Mutuelle members referred by local health centers. Several sources contribute to the district Mutuelle funds: the National Guarantee Fund of Mutuelles, the sector level Mutuelle organizations, the district, and external partners. At the sector level, the Mutuelles perform a risk-pooling function for high-risk events at the sector level. Sector level Mutuelles are financed primarily by user fees, while the rest of the fees are from NGOs and development partners, interest generated from their bank accounts, and the Government of Rwanda to co-finance and subsidize membership fees.

The government sponsored program Rwanda Health Insurance Scheme (La Rwandaise d’Assurance Maladie or RAMA) is financed by monthly contributions of 15% of the member’s base salary with the employer paying 7.5% and the employee paying the difference. Members of the government sponsored Military Medical Insurance (MMI) contribute 5% of their base salary and the government adds 17.5% of the members’ base salary. Beneficiaries also contribute a 15% direct co-payment for services and pharmacies.

The table below summarizes the recipients of donor aid for health in Rwanda:

Financing agentShare of donor aid
NGO55%
Development partner direct management19%
Central government14%
Direct to local government or health district12%
Total100%
Chile: National Health Fund (FONASA)
  • General government revenues
  • Payroll Tax
  • Member contributions
  • Formal Sector
  • Government Employees
  • Informal Sector
  • Premiums
  • Co-payments

Monthly beneficiary contributions make up one third of FONASA funding, while half of FONASAs resources come from national coffers. The remainder is made up of operating income and copayments. FONASA is progressive in its funding mechanisms. Government subsidies are well targeted, with 90% directed to the indigent and 7.5% directed to low-income individuals. Furthermore, between 32% and 40% of high-income earner contributions cross-subsidize care for poorer beneficiaries.

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Monthly beneficiary contributions make up one third of FONASA funding, while half of FONASAs resources come from national coffers. The remainder is made up of operating income and copayments. FONASA is progressive in its funding mechanisms. Government subsidies are well targeted, with 90% directed to the indigent and 7.5% directed to low-income individuals. Furthermore, between 32% and 40% of high-income earner contributions cross-subsidize care for poorer beneficiaries.

Primary health is free for all who enroll with FONASA. Hospital and ambulatory care under the Institutional Modality, however, require copayments that are determined by the income group in which the patient is classified. Group A (the indigent) and B (low income) receive free care, while group C pays 10% of the cost of the service and group D pays 20%. When enrollees undergo three family health events that require medical attention, those in groups D or C are transferred to groups C and B respectively. Catastrophic Insurance under FONASA is fully covered for patients who elect the Institutional Modality in accredited public hospitals. Furthermore, under the Free Election Modality, FONASA beneficiaries in groups B, C, and D can obtain a partial voucher from FONASA by making an out-of-packet payment for private health care from accredited providers.

Resources for FONASA to cover the cost of the AUGE plan come from a temporary increase in the consumer tax from 18% to 19%, a tobacco tax, customs revenues, and the sale of the state’s minority shares in public health enterprises. The AUGE Plan only takes up 23% of the general budget set aside for service provision. AUGE services are free for those in categories A and B. Enrollees in categories C and D must in principle pay a copayment equal to 20% of the cost of the service. After a yearly copayment limit based on income is reached, 100% of services are covered for those in categories C and D. To date, however, copayments have seldom been collected.

ISAPRE funding stems from the 7% monthly enrollee income contribution. Beneficiaries are also free to make additional contributions in order to purchase additional coverage. ISAPREs spend ten times more on per capita administration than FONASA, and despite the better health of its enrollees, they spend two times more on health care services per member. The average copayment under the ISAPREs was 35% in 2004. Although ISAPREs enrolled 22% of the population in 2004 they accounted for 43% of all health expenditures. Part of the reason for the higher expenditures is that ISAPREs rely almost exclusively on private providers that have higher cost and prices compared to public providers. These prices can be maintained because ISAPRE beneficiaries perceive the quality of private providers to be superior to the quality of public providers that are financed by FONASA.

Figure 1 highlights the primary financial flows within the Chilean health system. The top half of the figure includes the resource flows for FONASA and the bottom half demonstrates resource flows for ISAPREs.

 Financial flows within the Chilean health system

: Taiwan: National Health Insurance
  • Member contributions
  • General government revenues
  • Employer contributions
  • Formal Sector
  • Government Employees
  • Informal Sector
  • Premiums
  • Co-payments

Revenue for the National Health Insurance (NHI) system comes primarily from individual payroll deductions and employer contributions, supplemented by governmental funds from general revenue. A small proportion of revenue also comes from a “sin tax” on cigarette sales. The working population pays premiums that are split with employers while non-working individuals pay a flat rate which is subsidized by the government.

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Revenue for the National Health Insurance (NHI) system comes primarily from individual payroll deductions and employer contributions, supplemented by governmental funds from general revenue. A small proportion of revenue also comes from a “sin tax” on cigarette sales. The working population pays premiums that are split with employers while non-working individuals pay a flat rate which is subsidized by the government. The share of premiums paid by the insured, employers, and government varies greatly within the different population subgroups and also varies based on how many dependents an individual has. For public or private employees the government pays 10%, the employer 60%, and the employee 30% through a payroll deduction. The non-poor self-employed pay 100% of their income-based premium without a government subsidy. For the poor who are unable to pay the premium and for military personnel, the government subsidizes 100% of the premium from general government revenues.

Ratio of Financial Resources for Final NHE

In 2002, the Supreme Court in Taiwan ruled that no one could be denied care because of lack of ability to pay. For those temporarily unable to pay, the Bureau of National Health Insurance (BNHI) has a fund from which such people may take out interest-free loans to pay premiums. Taiwan’s economy has advanced to a stage where most workers were employed in the formal sector, so a compulsory NHI can effectively collect premiums through employers. The government also has the revenue to subsidize the coverage of the poor, veterans, and farmers. Taiwan also has the organizational ability and human resources to manage national health insurance.

The premiums are supplemented by out-of-pocket payments. Regular office visits have co-payments that are fixed and unvaried by the person’s income in the realm of about 10% of the cost of an inpatient visit—adjusted according to type of wards and length of stay—and 20% for an outpatient visit. Both co-payments and premiums are waived for the very poor and veterans. To help cope with NHI budget pressures, patient cost sharing increased in 2001 and again in 2002 for certain kinds of visits, drugs, inpatient care, lab tests and examinations. These copayments are unvaried by income to avoid the burden of administering a complex individual income-related-cost-sharing program. Though out-of-pocket payments fell from 48% of the total amount spent on health care in 1993 to 30% in 2000, critics still argue that the copayments are regressive, putting the burden primarily on the sick that are already disadvantaged and are often poor.

Average Medical Care Expenditure per Person

Korea, Rep.: National Health Insurance Program
  • Payroll Tax
  • General government revenues
  • Formal Sector
  • Informal Sector
  • Premiums
  • Co-payments

The National Health Insurance Program (NHIP) has 3 sources of funding: monthly premium contributions from the insured and employers; government subsidies; and tobacco surcharges.The National Health Insurance Program (NHIP) has 3 sources of funding: monthly premium contributions from the insured and employers; government subsidies; and tobacco surcharges. Premium contributions are proportional to income and are shared equally between the insured individual and the employer. For the self-employed, premiums are calculated based on their income level in conjunction with the person’s property, motor vehicles, age and gender. There is a reduced contribution requirement for those who live on islands and remote areas and those serving in the military are exempt from paying premiums.

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The National Health Insurance Program (NHIP) has 3 sources of funding: monthly premium contributions from the insured and employers; government subsidies; and tobacco surcharges.The National Health Insurance Program (NHIP) has 3 sources of funding: monthly premium contributions from the insured and employers; government subsidies; and tobacco surcharges. Premium contributions are proportional to income and are shared equally between the insured individual and the employer. For the self-employed, premiums are calculated based on their income level in conjunction with the person’s property, motor vehicles, age and gender. There is a reduced contribution requirement for those who live on islands and remote areas and those serving in the military are exempt from paying premiums.

The National Government provides 14% of the total annual projected revenue of the NHIP. In addition, the government has a tobacco surcharge that contributes about 6% of the total annual projected revenue to the health insurance program.

Ghana: National Health Insurance Scheme (NHIS)
  • General government revenues
  • Payroll Tax
  • Member contributions
  • Donor funding
  • Formal Sector
  • Government Employees
  • Informal Sector
  • Premiums

The NHIS is financed from several different sources. Approximately 70% of total funding comes from a health insurance levy added to VAT, 23% comes from contributions made by formal sector workers to the Social Security and National Trust (SSNIT), and 5% comes from Premium payments. Members do not pay deductibles or copayments when accessing health care.

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The NHIS is financed from several different sources. Approximately 70% of total funding comes from a health insurance levy added to VAT, 23% comes from contributions made by formal sector workers to the Social Security and National Trust (SSNIT), and 5% comes from Premium payments. Members do not pay deductibles or copayments when accessing health care.

Each funding source is described in further detail below:

  • A 2.5% health insurance levy added to VAT
  • 2.5% of the 17.5% Social Security and National Trust (SSNIT) contribution made by formal sector employees (the 17.5% contribution is made up of a 12.5% contribution from employers and 5% contribution from employees)
  • Member premiums of between 7.20 to 48.00 Ghana cedis annually (USD5.00 – USD34.00)
  • Money that accrues to the fund from investments made by the NHIC Other:
  • Funds allocated to the scheme by the Government of Ghana via Parliament
  • The central exemptions fund, formerly used to provide exemptions from user fees for those classed as ‘indigent’
  • Donor funds (few details on these donor funds are available)

The NHIS is a hybrid of social and community based health insurance models. The basic structure of the NHIS is described as a “hub-satellite” model. The “hub” of the system, which is essentially based on the SHI model of pooled public tax resources, is the National Health Insurance Fund (NHIF) which is administered by the National Health Insurance Authority (NHIA). The “satellites” are a country wide network of CBHI schemes known as District Wide Mutual Health Insurance (DWMHI) schemes which are monitored, subsidized and re-insured by the “hub.”

The table below presents estimates and projections for the composition of NHIS income from 2008 to 2018.

200820092010201120122018
SSNIT members58.8659.5176.8294.41117.86327.03
Health insurance levy176.56213.64256.37302.52352.44836.70
Insurance premiums (DMHIS)13.0520.8927.5335.7745.63171.46
Investment income5.5348.5351.0449.5645.070.00
Other income0.050.050.070.080.090.24
Total254.05342.63411.94482.76561.991,335.43

At present, employers are not held to anything in terms of contributions other than ensuring the necessary SSNIT deductions are made from the payrolls of formal sector employees. However, the NHIC has apparently made it known that it would prefer employers to contribute a sum equal to that of the employee’s contribution.

The NHIA has set the DWMHI annual premium levels at a minimum of 7.20 Ghana cedis and a maximum of 48.00 Ghana cedis (approximately $5-$34 in 2009) per adult member, to be determined by income status. The NHIA website states that this can be paid as a lump sum, or in 12 monthly installments (www.nhis.gov.gh). In practice, varying flat premiums are paid by districts across the country, with rich districts paying higher than poor districts.

The recent return to power of the NDC in the 2008/2009 elections may signal a significant change in the premium structure, however. The new government is considering the possibility of instituting a one-time premium that would guarantee access to the NHIS for life. Although no definite figures have been given as yet, rumor has it that the life time premium may be in the range of 150 Ghana cedis (just over $100), although the figure of $10-12 is also heard.

Nigeria: National Health Insurance System
  • Employer contributions
  • General government revenues
  • Member contributions
  • Formal Sector
  • Informal Sector
  • Premiums

The National Health Insurance Scheme (NHIS) is funded primarily by contributions from members based on income. For the Formal Sector Social Health Insurance Program contributions are premiums that make up 15% of an individual’s basic salary, with the employer contributing 10% while the employee pays 5% for coverage of themselves, their spouse, and up to 4 children. An employer may negotiate with an HMO for coverage of additional supplementary benefits and pay the extra contributions required. Participants in the Informal Sector Program are expected to make a monthly contribution based on the benefits package of their choice as well as other factors. The poor, elderly, veterans, and disabled are exempted from paying membership premiums.

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The National Health Insurance Scheme (NHIS) is funded primarily by contributions from members based on income. For the Formal Sector Social Health Insurance Program contributions are premiums that make up 15% of an individual’s basic salary, with the employer contributing 10% while the employee pays 5% for coverage of themselves, their spouse, and up to 4 children. An employer may negotiate with an HMO for coverage of additional supplementary benefits and pay the extra contributions required. Participants in the Informal Sector Program are expected to make a monthly contribution based on the benefits package of their choice as well as other factors. The poor, elderly, veterans, and disabled are exempted from paying membership premiums.

The funding structure of the Nigerian health system draws on colonial origins, when services were financed primarily by the central government. Currently, allocations from general government revenue comprise about 26.1% of overall funding, 6.1% comes from private organizations and 1.8% from development partners. Household out of pocket expenditures remain the largest source of financing, providing about 55.9% of total revenue.

Kenya: National Hospital Insurance Fund
  • Payroll Tax
  • Member contributions
  • Employer contributions
  • Formal Sector
  • Government Employees
  • Informal Sector
  • Premiums
  • Co-payments

The National Hospital Insurance Fund (NHIF) requires compulsory membership for all salaried employees with premium contributions automatically deducted through payroll. Contributions are calculated on a graduated scale based on income, with a majority contributing between KES 30 to KES 320 per month. For the self-employed and others in the informal sector, membership is contributory and is available for a fixed premium of 160 KES per month.

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The National Hospital Insurance Fund (NHIF) requires compulsory membership for all salaried employees with premium contributions automatically deducted through payroll. Contributions are calculated on a graduated scale based on income, with a majority contributing between KES 30 to KES 320 per month. For the self-employed and others in the informal sector, membership is contributory and is available for a fixed premium of 160 KES per month.

A new proposed measure has been gazetted in June 2010 that will see the first increase in premiums to the NHIF in almost two decades. This to between KES 150 to KES 2,000 per month, depending on income, with approximately 46,000 of the highest paid formal sector employees paying the maximum amount. Under this proposed change, premium payments for those in the informal sector would rise from KES 160 to KES 500 per month. Finally, under the proposed changes, other sectors of the government, development agencies, philanthropic organizations and other well-wishers would be able to purchase NHIF cover for indigent populations for a rate of KES 300 per person per month. Proposed changes are currently under judicial review and have not yet been implemented.

NHIF funding and payments to providers exist alongside supply-side payments from the government directly to public sector providers. In essence, the salaries of most physicians and other health workers are still paid via supply-side payments, with NHIF payments typically going toward facility charges, drugs, supplies and consumables, and other types of overhead.

Total health expenditure in Kenya, 2000 and 2006

2000 (US$)2006 (US$)
Total health expenditure726,433,040964,357,613
Source2000 (%)2006 (%)
Public (Central and Local Government)29.629.3
Private (Household and OOP)5439.3
Donors (Local and International)16.431
Other0.10.4

Source: Kenya Ministry of Health, 2009

Overall, Kenya spends approximately 5% of its GDP on health. There are 3 major sources of financing for the health care system: the government (both central and local); private contributions; and donors. Donor contributions to the health sector have been steadily increasing from 8% of the health budget in 2000 to 36% in 2008. Traditionally, donor funding has been allocated directly to specific programs, limiting the flexibility of the MOH to reallocate donor assistance to fit government priorities.

Public funding comes primarily from taxation, and allocations from the Ministry of Health (MOH), local governments, and parastatal organizations. Funding flows from the Ministry of Health (MOH) to the district level District Health Management Boards (DHMBs) and District Health Management Teams (DHMTs) and supplemented by local government, revolving funds, and user fees. Since the 1970s, the real financing allocations to the public sector have declined, and in 2008 the MOH only spent approximately USD $11.80 per capita, well below the WHO recommended spending level of USD $34 per capita. This lack of funding is largely because tax revenues have proven to be an unreliable source of health finance. To fill the funding gap, MOH has pursued a policy of cost sharing, which places a higher burden for financing on out-of-pocket expenditures in both absolute terms and as a percentage of the health budget. This poses a serious financing issue for the 56% of the population who are considered poor. In 2004, the government attempted to minimize cost sharing through the institution of a “10/20” policy, in which local health facilities only charge 10 or 20 KES for curative care; this has decreased out-of-pocket expenditures from 54% of THE in 2000 to about 36% in 2009.

Philippines: PhilHealth
  • General government revenues
  • Member contributions
  • Formal Sector
  • Premiums

Funding for the scheme varies based on the population covered, although the majority of funds flow from general taxation. Premiums for the formal sector are set by law to be up to 3% of monthly income. Premiums for both the poor and the informal sector are 1,200 pesos annually (about 25 USD).

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Funding for the scheme varies based on the population covered, although the majority of funds flow from general taxation. Premiums for the formal sector are set by law to be up to 3% of monthly income. Premiums for both the poor and the informal sector are 1,200 pesos annually (about 25 USD). However, the cost of insurance for the poor is fully subsidized by the central and local governments.

Funding by population is as follows:

  • Formal sector: Employer and the employee split the required premium 50/50%.
  • Indigents: Central and local governments fully subsidize, with local governments contributing (on average) 25% of the premium and national government contributing (on average) 75% of the premium.
  • Retirees: Lifetime free membership for those who are 60 years old and older and have paid 10 years worth of premiums during employment in the formal sector.
  • Non-poor, Overseas Filipino Workers (OFWs), and others not eligible for other three categories: Premiums paid by individuals, referred to as the individual paying program (IPP).

Both national and local governments are responsible for the full subsidy for indigents. A recent policy proposal is for the national government to fully pay the subsidy in order to accelerate the efforts towards universal coverage by enrolling the poorest. However, this proposal has not been approved and the current cost-sharing scheme remains. Currently, the local government identifies and determines who is poor, then enrolls them in the national health insurance program. Once enrolled, the national government is expected to pay its counterpart. The central government cost-sharing percentage depends on the income level of the local government, but on average local governments contribute 25% and the national government contributes 75%.

All premiums are pooled nationally and in effect, there is cross-subsidization across districts. The frequency of premium contributions varies by each population category. For example, formal sector payroll collections naturally occur monthly, while for the non-poor, premium contributions occur based on when individuals seek to enroll. For OFWs, the premium is collected upon departure from the country and then on an annual basis. For the poor subsidized by the government, enrollment occurs annually and the local government pays quarterly while the national government is billed as soon as enough local governments have enrolled their poor. National government payment is dependent on the availability of funds.

Premiums for formal sector are set by law to be up to 3% of the monthly income. However, the current level is 2.5%, applied up to the first 30,000 pesos of income (i.e., all people earning up to or more than 30,000 pesos pay the same premium, while people with salaries under 30,000 pesos pay less). The premium of 1,200 pesos annually for the poor and informal sector has been the same for more than 9 years. The rate for the OFWs was 900 pesos annually until two years ago when it was increased to 1,200 pesos.

India: Rajiv Aarogyasri
  • General government revenues
  • None
  • None
  • None

Aarogyasri is funded through general tax revenues generated by the state of Andhra Pradesh and the cost of premiums is fully subsidized for each beneficiary.

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Aarogyasri is funded through general tax revenues generated by the state of Andhra Pradesh and the cost of premiums is fully subsidized for each beneficiary.

The state chose to fully cover the cost of insurance premiums as the administrative costs of collecting the premium would outweigh the total cost of the premium itself. In addition, the state wanted to ensure that the benefits of the scheme reached the poorest, who might otherwise be deterred from enrolling even if the premium to be paid out-of-pocket was nominal.

India: RSBY
  • General government revenues
  • None
  • Below Poverty Line
  • Registration Fees

RSBY is funded by the central and state governments through general tax revenue. The insurance premium is determined at the state-level and varies from state to state and district to district in the range of Rs. 400 (USD8) to Rs. 600 (USD12). Beneficiaries also pay a small amount (Rs. 30, less than one US dollar) as a registration fee, which is used to cover certain administrative costs associated with scheme.

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RSBY is funded by the central and state governments through general tax revenue. The insurance premium is determined at the state-level and varies from state to state and district to district in the range of Rs. 400 (USD8) to Rs. 600 (USD12). Beneficiaries also pay a small amount (Rs. 30, less than one US dollar) as a registration fee, which is used to cover certain administrative costs associated with scheme.

Funding from central and state governments is divided as follows:

  • 75% (90% in case of Jammu & Kashmir and North-eastern States) of the premium comes from the central government
  • 25% (10% in case of Jammu & Kashmir and North-Eastern States) of the premium comes from the state government

The insurance premium is determined at the state-level based on an open tender process.

Indian Insurance Regulatory Development Authority (IRDA) registered insurers compete in competitive bidding; the organization that fulfils technical criteria and has the lowest premium is chosen. The state and central governments pay the agreed upon premium to the insurance company commensurate with the number of BPL families enrolled. The insurer bears all the risk of the scheme and though the state governments provide support to the insurer(s), it is the responsibility of the insurer to operationalize the scheme on the ground.

Mexico: Seguro Popular
  • General government revenues
  • Member contributions
  • Informal Sector
  • Premiums

The SP is financed by the federal government, the state government, and enrollees. The federal and state governments fund a social solidarity contribution while enrolled families contribute a premium that is tied to income. Families in the two lowest income deciles and those in the third lowest decile with a child under five years of age are not required to contribute, conditional on their participation in health promotion activities. Annual family contributions range from $60 USD for families in the third lowest decile to $950 USD for families in the highest decile. Family premiums are collected at the state level, where they remain to be used to fund the essential benefits package.

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The SP is financed by the federal government, the state government, and enrollees. The federal and state governments fund a social solidarity contribution while enrolled families contribute a premium that is tied to income. Families in the two lowest income deciles and those in the third lowest decile with a child under five years of age are not required to contribute, conditional on their participation in health promotion activities. Annual family contributions range from $60 USD for families in the third lowest decile to $950 USD for families in the highest decile. Family premiums are collected at the state level, where they remain to be used to fund the essential benefits package.

Federal funding for the SP takes the form of two distinct contributions to the states—the social contribution and the solidarity contribution. The social contribution by the federal government is a fixed allocation per enrolled family and is periodically adjusted for inflation. The SP federal contribution comes from general taxes. The federal solidarity contribution is meant to redress the large differences in development between the states. It is 1.5 times the social contribution and is generally larger for poorer states. The solidarity contribution is based on a formula that considers a per family fixed component, a health-needs adjusted component, a component aimed at promoting additional state contributions, and a component based on health system performance. The goal of this resource transfer mechanism is to make up for historical imbalances and inequities, to respond to the needs of different population groups, and to provide incentives for performance and affiliation. The formula weights and the indicators used in the formula are updated annually.

The state contribution is similar in all the states, equaling approximately half of the federal social contribution. The family contribution is determined on a sliding-scale, with the goal that no family should contribute more than a fair share based on its ability to pay. Ability to pay has been defined as disposable income, which is total household spending minus spending on food. The family contribution equals a fixed proportion of disposable income, with a maximum of 5%. Income deciles three through nine have a nominal contribution, while the tenth decile has two levels of contribution due to the variable nature of the income distribution. As of 2008, 97% of families made no premium contributions. Likewise, states have also failed to pay their full share of the premium.

  Seguro Popular Budget by Type of Contribution, 2004-2007

The framework of the reform creates certain paradoxes in its implementation. The percentage of families that are eligible to enroll in SP varies by state. The population of the northern industrialized states tends to have high levels of social security membership, whereas the population of poor southern states tends to have low levels of social security membership. This means that poor states with weak tax-based incomes must enroll a much higher percentage of their population out of state coffers compared to rich states with stronger tax bases. This appears to perpetuate inequality in health care delivery on a geographical basis. Because poorer states have the largest proportion of both the poor and the uninsured, and because the state contributions to the SP are established on a per-enrolled family basis, poorer states have to make a higher contribution than wealthier states, leading to increased geographical inequity. Therefore, federal resources are based on both a per-enrolled family fee plus a solidarity supplement for poorer states to help mitigate some of the adverse budgetary effects that stem from a large population of poor households.

The National Commission for Social Protection in Health (CNPSS) has established that states must target a maximum of 30% of their resources to purchase medications, 40% to contract personnel, and 20% for activities of health promotion, early detection, and prevention. Once the requirements for the transfer of resources have been met, funds are sent to the State Finances Secretariat. Before 2007, funds were transferred directly to the State Health Secretariats. The change was established due to the reporting requirements of the State Finance Secretariats, leading to increased transparency, as well as improving the registration and use of resources at the state level. Resources are transferred to the states every three months.

Since 2004, resources transferred to the Social Health Protection System have increased by an average of 11.5% annually in real terms, thereby reducing the gap between IMSS health expenditures and the expenditures of the Ministry of Health.

  Health Spending by the Ministry of Health and the Social Security Institutions, 2000-2010

From 2001 to 2003, the growth rate in per capita expenditures on public health for the uninsured population averaged 5.2%. Conversely, during the first few years of the reform from 2004 to 2006, this growth rate nearly doubled to 12.3% per year. From 2001 to 2006, public expenditure for the uninsured increased by 61% overall. Since the implementation of SP, public health expenditure increased from 43.8% of total health expenditure in 2002 to 46.4% in 2006. This trend of growing public health expenditures is expected to continue.

Brazil: Unified Health System (SUS)
  • General government revenues

Federal resources originating in a pool of value-added, general income, financial operations and insurance, export, and import taxes flow into the National Health Fund (NHF), which then funnels resources in five separate directions. First, the NHF transfers resources to both the State Health Funds (SHF) and the Municipal Health Funds (MHF), which are responsible for consolidating resources from the different sources. Second, the NHF transfers resources to public and private hospitals, public and private health care providers, and to special health programs such as the PSF. The same type of resource re-allocation occurs at both the state and municipal levels, with the following exceptions. (1) The State Health Fund only transfers resources to the Municipal Health Fund, and (2) the Municipal Health Fund does not transfer resources to any other administrative bodies. The Health Secretariats at both the State and Municipal levels oversee the administration of funds provided by the different sources.

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Federal resources originating in a pool of value-added, general income, financial operations and insurance, export, and import taxes flow into the National Health Fund (NHF), which then funnels resources in five separate directions. First, the NHF transfers resources to both the State Health Funds (SHF) and the Municipal Health Funds (MHF), which are responsible for consolidating resources from the different sources. Second, the NHF transfers resources to public and private hospitals, public and private health care providers, and to special health programs such as the PSF. The same type of resource re-allocation occurs at both the state and municipal levels, with the following exceptions. (1) The State Health Fund only transfers resources to the Municipal Health Fund, and (2) the Municipal Health Fund does not transfer resources to any other administrative bodies. The Health Secretariats at both the State and Municipal levels oversee the administration of funds provided by the different sources.

 Flow of funds within the Unified Health System (SUS)

Funding of the SUS takes place through a variety of resource streams. In 2001, federal funds were transferred to municipalities through 78 different mechanisms and programs, which were linked to particular administrative requirements, as well as planning and control instruments. Some of these mechanisms pay for production, while others pay for coverage on a per capita basis. Individuals have argued that such a system could lead to high transaction costs. Indeed, a recent study found that in 2007, private insurance and commercial plans allocated 81% of their revenue for the payment of medical services, whereas the Ministry of Health allocated only 66% of its resources to such an end.

There are five primary funding mechanisms through which the National Health Fund channels resources for services rendered under the SUS.

  1. Direct payment to service providers by the MOH. These are reimbursements for costs assumed by private and public providers. This is done in a fashion similar to the Diagnostic Related Groups (DRGs) in the US. Such remuneration can be affiliated with hospitalizations and ambulatory costs incurred by SUS-associated providers.
  2. Direct transfer to states or municipalities that are fully managed by the SUS for hospitalizations or ambulatory care. Such transfers are based on prior budgets and on future costs agreed to between states, municipalities and the federal government. The MOH also transfers funds for complex procedures like organ transplants and surgeries.
  3. Transfers to special programs for health promotion and disease prevention. These programs include tuberculosis and diabetes.
  4. Transfers to states for activities within the municipalities associated with payments for special medications for patients with chronic diseases, sanitation, and for programs such as PSF.
  5. Direct transfers to municipalities for basic health activities. These transfers include per capita payments for the financing of the basic health program (PAB), the PSF, the PACS, nutritional programs, and contagious diseases programs.

Between 1985 and 1996, federal financing for public health fell from 73% to 54% of public resources for health. Meanwhile, municipalities augmented their total share of national health costs from 9% to 28%, while states remained at 18%. During this same time period, looking at the responsibility for spending those resources, the federal share fell from 67% to 46%, while that of the municipalities increased from 10% to 35%. In other words, there has been a clear progression towards municipal responsibility for both the mobilization and utilization of resources.

In 2001, a constitutional amendment declared that federal funds must be allocated in an amount equal to the prior year’s budget, adjusted for GNP, starting with the 1999 budget as a reference. Furthermore, the amendment stipulated that states and municipalities must increase their health spending until it reaches 12% of the state budget and 15% of the municipal budget. However, the amendment did not define what could and could not be considered an expense. Therefore, state and local governments began including expenses such as food stamps and care for prisoners that had previously been accounted for elsewhere. Thus it is difficult to ascertain which municipalities and states actually increased public health activities and attempted to improve the delivery of care.

Funding for the Family Health Program (PSF) by the national government consisted of a flat, one-time transfer for establishing a new PSF team. Thereafter, variable transfers are meant to incentivize continuous expansion of coverage. Table II highlights the incentives in place for the expansion of the PSF in 2002.

Table 1: Financial Incentives for the Family Health Program

LevelPopulation coverageAmount per team per year ($R)
10 to 4.9%R$ 28.008,00
25 to 9.9%R$ 30.684,00
310 to 19.9%R$ 33.360,00
420 to 29.9%R$ 38.520,00
530 to 39.9%R$ 41.220,00
640 to 49.9%R$ 44.100,00
750 to 59.9%R$ 47.160,00
860 to 69.9%R$ 50.472,00
970% and moreR$ 54.000,00

Source: La Forgia, G. (This incentive model was in place during the first 10 years of the Family Health Program. It is no longer in use.)

The Brazilian health system also has a sizable private health sector known as the Supplementary Health System (SHS). Since 1988, consumption of private health insurance has grown substantially— particularly among the middle class—with private spending rising faster than public spending. Income tax breaks that compensate for private expenses on health care account for some of this growth.

Thailand: Universal Coverage Scheme
  • General government revenues
  • None
  • None

The Universal Coverage Scheme (UCS) is financed through general tax revenues paid to local contracting units on the basis of population size. The UCS reform raised public health spending from about 66.25 billion Baht in 2000-01 to 72.78 billion Baht in 2001-02. In recent years, the government has responded to criticisms claiming that UCS is underfinanced by raising the budget for the scheme.

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The Universal Coverage Scheme (UCS) is financed through general tax revenues paid to local contracting units on the basis of population size. The UCS reform raised public health spending from about 66.25 billion Baht in 2000-01 to 72.78 billion Baht in 2001-02. In recent years, the government has responded to criticisms claiming that UCS is underfinanced by raising the budget for the scheme.

General tax revenue was decided as the source of funding for the UCS because of the political urgency and focus on nationwide scale-up. The target population for the scheme is largely in the informal, agricultural sector and does do not have access to consistent cash income for any kind of regular premium payment, therefore making premium collection difficult.

A copayment of Baht 30 was also implemented. This copayment was exempted for low income people, children below 12 years old and the elderly (i.e., those above 60 years old). While this copayment did not reflect the marginal cost of interventions, it did prevent overuse.

The 30 Baht copayment was abolished in November 2006 for political reasons. However, abolition of the 30 Baht copayment had no effect on overall utilization of out-patient services. This is likely because the majority of beneficiaries have been already exempted from the copayment.

The UCS reform raised public health spending from about 66.25 billion Baht in 2000-01 to 72.78 billion Baht in 2001-02. Thus, the reform cost US $175 million. The overall budget for UCS has increased to 82.02 billion (18%) and 91.36 billion (10%) in the years 2006 and 2007 respectively.

Co-financing arrangements for the scheme are currently being considered—for example, one proposal suggests partial or non-subsidization of medical care costs for beneficiaries who decide to stay in a private room.