SHA Revision

Classifications of Health Financing Schemes (ICHA-HF)

Chapter 7

SHA Expert Advisory Meeting of Health Accounts Experts

Paris, 14-15 June, 2010

1

Purpose of the discussion

• Final confirmation of the main concept of Financing Schemes (supported at the 2009 Meeting of Health Accounts experts and WHO regional consultations)

• Review of the amendments in some categories of ICHA-HF

• Confirmation of the interpretation of “public” vs “private”

• Identifying additional work, if necessary

2

Requirements for the accounting tools for health financing

• To improve the analytical power of SHA

– different needs of countries / current vs. future needs

• To improve the comparability of health expenditure data

– together with other elements of SHA 2.0

• To ensure feasibility of regular data reporting

– current vs. future possibilities

3

Growing expectation from policy analysts

• Who gets what and how? How are the resources raised?

• How the particular health care services or goods are financed. (HC x HF table];

• What kinds of services are ensured (purchased) under the different financing schemes? [HC x HF table];

• How the resources of the different financing schemes are allocated among the different groups of beneficiaries, such as different groups of diseases [Beneficiaries x HF table];

• “Where does the money go to?” *HP x HF table+;

• How a particular health financing scheme (sub-system) collects its revenues (Financing sources) [HF x FS tables];

Stating point: What basic information should HF classification provide?

What information is provided by the three basic tables?

• How much is spent on types of care (HC) and paid to providers under the different financing sub-systems, such as compulsory insurance, voluntary insurance and paid by OOP, etc.- regardless of what institutional units carry out the payment

HF

HC

HP

Main problems with the ICHA-HF categories under

SHA 1.0

• Ambiguity of the definitions of HF categories (schemes vs. institutional units)

– E.g., Mixing scheme and institutional unit in one category (“private insurance enterprises (other than social insurance”)

– JHAQ uses both terms: “agents /schemes”

• Do not reflect adequately the complex and changing systems of health financing, e.g.

– private insurance enterprise can manage both compulsory and voluntary insurance (e.g., Netherlands)

– compulsory insurance can be managed by two different types of institutional units (e.g., Slovakia)

SHA 2.0: main components of accounting health financing

• Key concepts and definitions

• Tools proposed for international data collection

– Classifications

– Accounts (allocation of resources; revenue-raising)

– Key indicators

• Optional tools justified by

– different needs and capacity of countries

– future analytical needs

SHA 2.0 proposes the following key concepts

• Health financing schemes as the main “ building blocks” of a country’s health financing systems (Financing arrangements, for example, social health insurance, voluntary health insurance) (Chapter 7)

• Financing sources: Types of revenues of health financing schemes (For example, social insurance contributions, grants, etc. ) (Chapter 8)

• Financing agents: institutional units managing health financing schemes (For example, social insurance agencies, private insurance companies) (Annex)

Proposed framework

Institutional

Units

Financing Sources (Types of revenues)

(FS)

Financing schemes (HF)

Financing agents

Providers (HP)

Functions (HC)

Current framework

Financing sources (FS) Financing agents / schemes (HF)

Functions (HC)

Providers (HP)

10

Key concepts

SHA 2.0 SHA 1.0 / PG

HF: Health Financing Schemes

(e.g., social health insurance,

voluntary health insurance)

HF: Health care financing (SHA 1.0)

HF: Source of funding (SHA 1.0)

HF: Financing Agent (PG)

FA: Financing Agent

(institutional units realizing

/managing financing schemes:

e.g., insurance company)

FS: Financing Sources

(Revenues of Health Financing

Schemes, e.g., insurance

contribution, insurance fee, etc)

FS: Financing Sources defined as

institutional units (PG, JHAQ)

11

Classifications

SHA 2.0 SHA 1.0 / PG / JHAQ

ICHA-HF

Classification of Health Financing

Schemes

(Part 1 - already included in the

international data collection)

ICHA-HF

Classification of Health Care

Financing (SHA 1.0)

Classification of Financing Agents

(PG)

JHAQ: Financing agents/ schemes

ICHA-FS

Classification of Financing Sources

(Revenues of Health Financing

Schemes)

(Part1 or Part 2???)

ICHA-FS

Classification of Financing Sources

(PG, JHAQ) defined as institutional

units

ICHA-FA

Classification of Financing Agents

(Annex? optional tool)

Definition of health financing schemes

• Health financing schemes are the main sub-systems / components of a country’s health financing system.

• Include: direct payments by households for services and goods and third-party financing arrangements.

• Third party financing schemes are distinct bodies of rules, governing the – mode of participation in the scheme,

– the basis for entitlement to health care and

– the rules of raising and pooling revenues of the given sub-system.

(To put is simple: Rules over who gets what and how it is financed)

12

An example: financing schemes and institutional units

Financing schemes Institutional units (Financing agents)

Central government

Social security funds

Insurance corporations

Non-profit Institutions

Households

Governmental schemes (programs)

Compulsory social insurance

Voluntary private insurance

Foreign aid programmes

Out-of-pocket payments

Health financing schemes are managed by one or more institutional units, but are not themselves institutional units

Definition of Financing Agents

• A financing agent is an institutional unit involved in the management of one or more financing schemes.

• It may collect revenues, pay for (purchase) services under the given health financing scheme(s), and be involved in the management and regulation of health financing.

• For example: local government, social insurance agency, insurance company, etc.

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Definition of Financing Sources

• Financing sources are the revenues of health financing schemes received / collected from institutional units of the economy.

• The revenue is an increase in the funds of health financing schemes, through specific contribution mechanisms.

• The categories of financing sources are the particular types of revenues of health financing schemes (e.g., social insurance contributions, grants, voluntary transfers, etc.).

15

Questions for discussion

• Q7ai) Are they (HF, FA, FS) clearly defined?

• Q7aii) Is this an adequate starting point for the three classifications HF, FS, and FA?

• Q7aiii)Which definition would require further improvement?

16

Criteria for defining the categories of Financing Schemes

• Mode of participation (mandatory vs volutary)

– Eligibility defined by law, with mandatory or voluntary enrolment

– Discretion of private actors

• Benefit entitlement (based on contributions)

– Citizenship or Entitlement related to certain social characteristics

– Contribution payment / Obligation to by insurance

– Discretion of private actors (inc. RoW)

– Willingness to pay

• Basic method for fund-raising

• Mechanism and extent of pooling funds 17

Q7bi) Do you consider the main proposed categories of ICHA-HF appropriate?

HF.1 Governmental schemes and compulsory health insurance

HF.1.1 Governmental schemes (with sub-categories )

HF.1.2 Compulsory health insurance scheme

HF.1.2.1 Social health insurance

HF.1.2.2 Compulsory private health insurance

HF.2 Voluntary private health care payment schemes

HF.2.1 Voluntary health insurance (with sub-categories)

HF.2.2 NPISHs- financing schemes

HF.2.3 Enterprises financing schemes (other than employer-based insurance)

HF.3 Households out-of-pocket payment (with sub-categories)

HF.4 Rest of the World financing schemes (with sub-categories)

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19

What are the main differences at the 1st level categories?

Characteristics of financing schemes

HF.1: Governmental schemes and compulsory health insurance

- aimed at ensuring access to basic health care for the whole society / large part / vulnerable groups

HF.2: Voluntary private health care payment schemes

- pre-paid arrangements; -private initiatives; -access to care is based on discretion of private actors.

HF.3: Household out-of-pocket payment

- households’ direct payment at the time of the use of services

HF.4: Rest of the world funded schemes

- resources are provided by RoW, - separate budget and management for the use of funds

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Mode of

participation

Benefit

entitlement

Basic method for

fund-raising

HF.1.1.

Governmental

schemes

automatic for all

citizens/residents;

or eligibility is

defined by

regulation for a

specific group of

population (e.g.,

the poor

universal or

available for a

specific group of

population

defined by law

Budget revenues

(primarily taxes)

Additional

revenues: foreign

revenues

Voluntary domestic

revenues

Structure of HF: Table 7.3 and Criteria-tree

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Mode of

participation

Benefit

entitlement

Basic method for

fund-raising

HF.1.2.1 Social

health insurance

usually compulsory

for the eligible

groups. In some

cases, however, the

law defines the

eligible group(s),

but the enrolment is

voluntary

entitlement based

on contribution

payment by or on

behalf of the

insured person

(individual contract

is not required)

Non-risk related

health insurance

contribution. The

insurance contribution

may be paid by the

government (from the

state budget) on behalf

of some non-

employed groups of

population

HF.1.2.2

Compulsory

private

insurance

All residents (or

defined groups of

residents) are

obliged to purchase

a health insurance

policy

based upon a

contract between

the individual and

the selected health

insurance company

(or other agency

involved)

Health insurance

premiums. Tax credits

may also be involved

22

Mode of

participation

Benefit entitlement Basic method for fund-

raising

HF.2.1

Voluntary private

health insurance

voluntary based upon the

purchase of

voluntary health

insurance policy

(usually on the

basis of a contract)

usually non-income

related premium (often

directly or indirectly

risk-related

HF.2.2

Non-profit

Institutions

financing

schemes

voluntary discretionary donations from the

general public,

governments (budget

of national government

or foreign aid) or

corporations

HF.2.3

Enterprise

financing

schemes (other

than employer-

based insurance)

based on

employment at a

particular

corporation or

employment

status in general

Type of services:

discretion of the

corporation or

specified by law

revenues of the

enterprise

23

HF.2.1 Voluntary Private health insurance

schemes HF.2.1.1 Primary /substitutory health insurance

schemes HF.2.1.1.1 Employer-based insurance (other than

enterprises schemes) HF.2.1.1.2

Community-based insurance HF.2.1.1.3

Other primary coverage schemes HF.2.1.2

Complementary / supplementary

insurance schemes

Sub-categories of voluntary private insurance

24

Mode of

participation

Benefit

entitlement

Basic method for

fund-raising

HF.3

Household

out-of-pocket

expenditure

Discretion of the

household

individual

willingness to

pay

Voluntary domestic

revenues from

households

HF.4

RoW

financing

schemes

voluntary criteria set by

foreign entities

Foreign revenues

25

HF.3

Household out-of-pocket payment

HF.3.1 Out-of-pocket excluding cost sharing

HF.3.2

Cost sharing with third-party payers

HF.3.2.1

Cost sharing with government schemes

and compulsory insurance schemes

HF.3.2.2 Cost sharing with voluntary insurance

schemes

Sub-categories of OOP

26

Memorandum items

Governmental schemes and compulsory

health insurance together with cost

sharing (HF.1 + HF.3.2.1)

Voluntary health insurance schemes

together with cost sharing (HF.2.1+

HF.3.2.2)

Questions for discussion

• Q7bii)Are there any financial arrangements of countries that cannot be brought under any of these categories?

• Q 7ci)) Do you consider the categories of ICHA-HF clearly defined?

• Q7cii) Which of the definitions would require

further improvement?

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“Public” versus “private”

The use of the terms is often ambiguous:

• For example, WHO PG define social insurance contribution paid by households as “private fund” and tax paid by households is “public fund” (which is obviously not appropriate)

• What is meat by “public” vs “private”

– Institutional units providing revenues?

– Contribution mechanisms?

– Financing arrangements?

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“Public” versus “private”

Proposed interpretations (both are relevant – depending on the analytical puprose)

1) From the perspective of financing schemes

– Public and compulsory private expenditure ; and

– Voluntary private expenditure

2) From the perspective of compulsory versus voluntary contribution mechanisms

– Public and compulsory private funds spent on health care and

– Voluntary private funds spent on health care

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30

Financing schemes Major expenditure aggregates

HF.1 Governmental financing schemes and

compulsory health insurance Expenditure by government

schemes and compulsory

health insurance

(Or: public and compulsory private

expenditure)

HF.1.1 Governmental financing schemes

HF.1.2.1 Social health insurance

HF.1.2.2 Compulsory private health insurance

HF.2 Voluntary private health care

payment schemes (other than OOP)

Voluntary Private expenditure

HF.2.1 Voluntary private health insurance

HF.2.2 NPISHs-financing schemes

HF.2.3 Enterprises financing schemes

HF.3 Households out-of-pocket payment

HF.4 Rest of the World financing

programmes

Health spending from public, compulsory private and private funds

31

Revenues of financing schemes Major expenditure aggregates

FS.1.1.1

Tax revenues allocated to governmental schemes

Public funds spent on health care

FS.1.1.2

Social insurance contributions paid by the government

FS.1..1.3 Other transfers from government

FS.1.2 Social insurance contributions

FS.2 Compulsory private Insurance premiums

Compulsory private funds spent on health care

FS.3 Voluntary private Insurance premiums Private funds spent on health care

FS.4

Voluntary domestic transfers (other than grants)

FS.6 Other revenue (not elsewhere classified)

Financing health services vs gross fixed capital formation

• For example, a CT may be bought by a hospital or local government (as owner of the hospital), while the CT examinations may be paid by social insurance, voluntary insurance and OOP.

• Financing Schemes distinguishes the different ways of access to services. It concerns the final consumption of health services and goods.

• The financing of GFCF concerns the payment for production factors of health services and goods. The purchasers of infrastructure, equipment, software, etc. are the providers or the owners of health care institutions. Therefore, Classification of Providers (economic units) is the most suitable to account the financing of GFCF.

32

Optional tools (Annex)

• Classification of Financing Agents: ICHA-FA

• Optional tables

– HF x FA; HC x HF x FA; HP x HF x FA

– Expenditure by diseases, age and gender and Health Financing Schemes

• Sectoral accounts – accounting balance / deficit

33

Is the implementation feasible?

• ICHA- HF

– the proposed changes are in accordance with solutions in national data reporting (e.g., Netherlands, Slovakia)

– several countries: changes required only in the names of categories

• Implementation of optional tools

– Depends on countries’ needs and capacity

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• ADDITIONAL SLIDES

35

36

HF.2.2 NPISHs financing schemes

HF.2.2.1 Resident foreign government

development agencies schemes

HF.2.2.2 Other non profit (e.g., NGO) schemes

HF.2.3 Enterprises financing schemes

HF.2.3.1 Enterprises (except Health care

providers) financing schemes

HF.2.3.2 Health care providers financing

schemes

37

HF.4 Rest of the world financing schemes (non

resident)

HF.4.1 Compulsory schemes (non-resident)

HF.4.1.1 Compulsory health insurance schemes (non-

resident)

HF.4.1.2 Other schemes

HF.4.2 Voluntary private schemes (non-resident)

HF.4.2.1 Voluntary health insurance schemes (non-

resident)

HF.4.2.2 Other schemes

HF.4.2.2.1 Philanthropy / international NGOs schemes

HF.4.2.2.2 Foreign development agencies schemes

HF.4.2.2.3

Schemes of Enclaves (e.g., international

organizations or embassies)

SHA 2.0 vs. SHA 1.0

38

Revised ICHA-HF SHA Manual (current Version 1.0) HF.1

Governmental schemes and compulsory insurance (regardless the institutional unit managing the scheme)

HF.1 General government (institutional unit)

HF.1.1 Government financing schemes

HF.1.1 General government (excluding social security funds)

HF.1.2

Social health insurance scheme (regardless the institutional unit managing the scheme)

HF.1.2 Social security funds (institutional unit)

HF.1.3

Compulsory private insurance

SHA 2.0 vs. SHA 1.0

39

HF.2 Private sector

HF.2 Voluntary private health care payment schemes (other than OOP)

HF.2.1 Voluntary private health insurance

HF.2.1.1 Primary insurance coverage schemes

HF.2.1 Private social insurance

HF.2.1.1.1

Employer-based insurance HF.2.2 Private insurance enterprises (defined as institutional unit)

HF.2.1.1.2 Community-based insurance HF.2.1.1.3 Other primary coverage

schemes HF.2.1.2 Complementary voluntary

insurance schemes HF.2.2

NPISHs financing schemes HF.2.4 NPISHs (other than social insurance)

HF.2.3 Enterprises financing schemes HF.2.5

Corporations (other than health insurance)

SHA 2.0 vs. SHA 1.0

40

Revised ICHA-HF

SHA Manual (current Version 1.0)

HF.3 Household out-of-pocket payment

HF.2.3 Private household out-of-pocket expenditure

HF.3.1 Out-of-pocket excluding cost sharing

HF.2.3.1 Out-of-pocket excluding cost sharing

HF.3.2 Cost sharing: Government schemes and compulsory health insurance

HF.2.3.2 Cost sharing: central government

HF.3.3 Cost sharing: voluntary schemes

HF.2.3.3 Cost sharing: State /provincial government

HF.2.3.5 Cost sharing: Social security funds

HF.2.3.7 Cost sharing: other private l insurance

HF.2.3.9 All other Cost sharing

HF.4 Rest of the world funded schemes

HF.3 Rest of the world

Definition of financing agent

• A financing agent is an institutional unit managing one or more financing schemes: collects revenues and / or purchases services under rules of the given health financing scheme(s).

– Included are households as financing agent for out-of-pocket payments.

41

42

Classification of Financing Agents (ICHA-FA) FA.1. General Government FA.1.1 Central government

FA.1.1.1 Ministry of Health FA.1.1.2 Other Ministries and public units (belonging to central

government) FA.1.1.3 National Health Service Agency FA.1.1.4 National Health Insurance Agency

FA.1.2 State /Regional / Local government FA.1.3 Social insurance funds FA.1.9 All other general government units FA.2 Insurance corporations FA.2.1 Commercial insurance companies FA.2.2 Mutual and other non-profit insurance organisations FA.3 Corporations (other than insurance corporations) FA.3.1 Health management and provider corporations FA.3.2 Corporations (other than providers of health services) FA.4 Non-profit Institutions serving households (NPISHs) FA.5 Households

FA.6 Rest of the World FA.6.1 International organisations FA.6.2 Foreign governments FA.6.3 Other foreign entities

Accounting for the different roles of government

44

HF.1 and HF.2: Main differences compared to the current ICHA-HF

Revised ICHA-HF Current ICHA-HF

HF.1 Financing schemes aimed at ensuring access to basic care for the whole / majority (or most vulnerable groups) of society Regardless whether managed by government units or private enterprises

General Government Institutional units of government and social security funds on all levels of government

HF.2 Voluntary schemes Regardless whether managed by government units or private enterprises

Private sector All institutional units which do not belong to the government

Financing scheme Financing agent County

A

Country

B

HF.1.1

Government funded schemes

(programs ) total 30 5

FA. Ministry of Health 20

Other Ministries 5

NPISHs 5

HF.1.2 Compulsory social insurance total 60

FA.1.4 social security funds 40

FA.3 private insurance companies 20

HF.2.1 Voluntary private insurance total 5 10

FA.3 private insurance companies 5 8

FA.1.4 social security funds 2

HF.3

Households out-of-pocket

payment

FA.4

Households 50 25

HF.4 Foreign aid programmes total 15

FA.5 NPISHs (Domestic) 5

FA.1.3 government units 5

FA.5 Foreign NGOs 5

Example: Health expenditure by financing schemes and financing agents (optional

table)

Examples for indicators: revenue collection and pooling

• Share of domestic revenues of Government to current expenditure & gross capital formation

• Share of grants from international organisations in revenues of government funded schemes

• Share of foreign voluntary transfers in revenues of government funded schemes / NGOs health programmes

• Share of government funded schemes (programs), compulsory social insurance, compulsory private insurance, voluntary health insurance, out-of-pocket payments and other private schemes in total current expenditure

46

Examples for indicators: allocation of resources

Current expenditure by compulsory social insurance (on key healthcare functions)

– Current expenditure by compulsory social insurance, executed by social security agency

– Current expenditure by compulsory social insurance, executed by for-profit insurance companies

• Expenditure on prevention by government funded schemes

– Expenditure on prevention by government funded schemes, executed by local governments

– Expenditure on prevention by government funded schemes, executed by NGOs

47

Financing scheme Financing agent

Inp

atie

nt

se

rvic

es

Me

dic

al

go

od

s

Pre

ve

nti

on

Ad

min

ist

ratio

n

HC.I HC.5 HC.6 HC.7

HF.1.

1

Government

funded schemes

(programs)

IS.1.2 Local

government units

HC.6x HF.1.1

x IS.1.2

IS.5

NGOs

HC.6x HF.1.1

x IS.5

HF.1.

2

Compulsory

social insurance

IS.1.4 Social security

funds HC.Ix HF.1.2

X IS.1.4

IS.3 Private insurance

companies HC.Ix HF.1.2

X IS.3

HF.4

Foreign aid

programs)

IS.5

NGOs

HC.6.x HF.4.

x IS.5

IS.1.3 Government

units

IS.6

Foreign NGOs

HC.6.x HF.4.

x IS.6

Health expenditure by function, financing schemes and financing agent (extract) (optional table)

Allocation of resources (purchasing): What information is provided by SHA?

How much is spent on

- main types of services & goods (HCxHF);

- main disease or beneficiaries categories, or

- to main types of providers (HPxHF)

under the particular financing schemes;

(Optional tools): What institutional units (financing agents) carry out the „purchasing” under the particular financing schemes (HFxFA; HFxFAxHC; HFxFAxHP)

49