Healthcare Delivery - Risk Pooling

Providing effective healthcare delivery involves the establishment of medical centres across the country in such a way that they are easily accessible/affordable to all sections of the people. A sufficiently large network of centres would have to be functioning so as to conveniently cater to the health needs of the people. Such needs can be grouped into two types of services: basic services for normal healthcare needs requiring treatment for short duration (referred to as OPD services) and long term treatment for complicated ailments requiring hospitalisation. The financial implications of meeting the requirement of such needs, both for the individuals as well as for the state, are of different kinds. Depending on the magnitude of the need as determined by the geographical boundary and the population size, the budgetary needs of the state also can be substantial. In the absence of adequate/ suitable facilities, the out-of-pocket expenses incurred by the individuals will be huge.

At present, low income countries are struggling to raise the required resources to fund essential health services of a primary nature. As countries advance towards higher income brackets (i.e. middle/higher income levels), issues of universal  health coverage (which includes comprehensive health coverage), financial protection and health system efficiency assume priority. These objectives require an overhaul of the current financing structures involving technical, institutional, and political challenges. Risk pooling, in this context, refers to the collection and management of financial resources so that large unpredictable individual financial risks are distributed among all members of the pool. Pre-payment is an essential component of risk pooling. This may be either in the form of normal tax paid (using which the government sets up public health facilities of both the primary and the specialised type; which is open for usage by all the persons in general) or in the form of payment of exclusive ‘premium’ paid for health coverage (in which case the facilities are restrictively available only to the members of the system). There are various ways of meeting the financing needs of the health insurance programmes.

Four main health insurance mechanisms used to pool health risks are:

(i) State-funded systems;

(ii) Social health insurance;

(iii) Voluntary or private health insurance; and

(iv) Community-based health insurance.

The features of each one of these financing mechanisms differ significantly with no one method being inherently superior to the others. There is therefore a need to find out which one of the methods is the best suited for developing a system serving the essentials of equity, efficiency and sustainability. As discussed before, it is important to align the schemes to the country-specific economic, institutional, and cultural characteristics.