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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Vietnam: Compulsory and Voluntary Health Insurance Schemes |
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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. Read full sectionThe 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)
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. Compulsory and Voluntary Health Insurance SchemesFunding Primary Source of Funding: General government revenues
Secondary Source of Funding: None
Contributing Populations: Formal Sector
Types of Contributions: 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. 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)
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. |
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| Chile: National Health Fund (FONASA) |
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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. Read full sectionMonthly 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.
National Health Fund (FONASA)Funding Primary Source of Funding: General government revenues
Secondary Source of Funding: Payroll Tax, Member contributions
Contributing Populations: Formal Sector, Government Employees, Informal Sector
Types of Contributions: 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. 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.
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| : Taiwan: National Health Insurance |
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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. Read full sectionRevenue 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.
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.
National Health InsuranceFunding Primary Source of Funding: Member contributions
Secondary Source of Funding: General government revenues, Employer contributions
Contributing Populations: Formal Sector, Government Employees, Informal Sector
Types of Contributions: 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. 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.
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.
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| Kenya: National Hospital Insurance Fund |
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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. Read full sectionThe 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
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. National Hospital Insurance FundFunding Primary Source of Funding: Payroll Tax
Secondary Source of Funding: Member contributions, Employer contributions
Contributing Populations: Formal Sector, Government Employees, Informal Sector
Types of Contributions: 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. 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
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. |
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| India: Rajiv Aarogyasri |
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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. Read full sectionAarogyasri 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. Rajiv AarogyasriFunding Primary Source of Funding: General government revenues
Secondary Source of Funding: None
Contributing Populations: None
Types of Contributions: 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. 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. |
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| India: RSBY |
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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. Read full sectionRSBY 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:
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. RSBYFunding Primary Source of Funding: General government revenues
Secondary Source of Funding: None
Contributing Populations: Below Poverty Line
Types of Contributions: 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. Funding from central and state governments is divided as follows:
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. |
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| Brazil: Unified Health System (SUS) |
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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. Read full sectionFederal 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.
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.
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
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. Unified Health System (SUS)Funding Primary Source of Funding: General government revenues
Secondary Source of Funding:
Contributing Populations:
Types of Contributions: 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.
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.
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
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. |
