Financing of Healthcare - Constraints

One of the major constraints to improve the healthcare delivery system in developing countries is weak public sector management. These economies are characterised by the presence of large rural areas and high informalised labour markets which pose particular difficulties/challenges in the administration of effective taxation procedures. In view of this situation, it is necessary to improve/strengthen the delivery systems at the district and municipal levels where the systems are particularly weak. In the absence of efficient and adequate public sector health services, the out-of-pocket health expenditures are very high in these countries (estimated at 60 per cent of total health expenditure in low income countries and 40 per cent in middle income countries).

The challenge for low and middle income countries is therefore to channelise the high levels of out-of-pocket spending into either public or private resource pooling arrangements. The features of such financing mechanisms differ significantly with no one method being inherently better than another. Policy planning in such situations needs to duly take into account the context to determine which method constitutes the best means for developing a strong health financing system ensuring the three principles of equity, efficiency and sustainability. The mechanisms chosen to govern the system must be aligned with country-specific economic, institutional and cultural characteristics.