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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| Indonesia: Jamkesmas |
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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. Read full sectionThe 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. JamkesmasFunding Primary Source of Funding: General government revenues
Secondary Source of Funding: None
Contributing Populations: All populations
Types of Contributions: 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. 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. |
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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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| Korea, Rep.: National Health Insurance Program |
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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. Read full sectionThe 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. National Health Insurance ProgramFunding Primary Source of Funding: Payroll Tax
Secondary Source of Funding: General government revenues
Contributing Populations: Formal Sector, Informal Sector
Types of Contributions: 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. 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. |
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| Mexico: Seguro Popular |
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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. Read full sectionThe 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.
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.
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. Seguro PopularFunding Primary Source of Funding: General government revenues
Secondary Source of Funding: Member contributions
Contributing Populations: Informal Sector
Types of Contributions: 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. 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.
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.
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. |
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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. |
