National Health Service Systems

Systems established under the national health service have three main features. First, their primary funding comes from general revenues. Second, they provide medical coverage to the country’s entire population. Third, their services are delivered through a network of public providers. In many low and middle income countries such system exists alongside that of other risk pooling arrangements. Thus, they are not the sole source of coverage for the entire population. The features of national health services give them the potential to be equitable and efficient. Their wider coverage means that risks are also pooled broadly, without the dangers of risk selection inherent in other fragmented systems. Their efficiency potential arises from the fact that they are integrated under government control and have less potential for the high transaction costs that arise from multiple players. But when power and responsibility is decentralised with local authorities, coordination problems can ensue. Whether public provision is more efficient, equitable, and sustainable than private provision is a question not of ownership but of the underlying delivery structures and incentives facing the providers and consumers. Thus, although national health service systems have the theoretical benefit of providing health care to the entire population free of charge (except for any applicable user fees), the reality could be different. For instance, reliance on general government budgets is vulnerable to the vicissitudes of annual budget discussions and changes in political priorities.

In most low-income developing countries, public health spending as a share of the budget is low. Further, health services in many low and middle income countries are primarily used by middle and high income households in urban areas because of access problems for the rural poor. Also, the poor tend to use less expensive local primary care facilities due to the costs involved in accessing the public facilities. For exactly the opposite reasons, the rich tend to disproportionately use more of the expensive hospital services of the public sector. Public provision of health services also face problems of corruption and inefficiencies caused by budgets that do not generate the appropriate incentives and accountability. To exploit the potential strengths of national health service systems it is, therefore, important for developing countries to improve the capacity to raise revenue, the quality of governance and institutions, and the ability to maintain the universal coverage and reach of the system. It is also important to take specific measures to target spending to the poor, such as by increasing the budgetary allocation for primary care. But the system must not neglect the needs of the middle and high-income populations (as they are capable of influencing the political support). They can also opt for privately financed system at the expense of supporting the public system.