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10. CLASSIFICATION OF FINANCING SCHEMES (FINANCING AGENT)
Principles and analytical use
The current categories of health care financing (ICHA-HF) do not enable the complex and changing systems of health financing to be adequately reflected. Insurance and financing schemes are heterogeneous and have evolved significantly as a result of recent reforms and policy initiatives. Furthermore, ICHA-HF does not contain such schemes that play an important role in several lower income countries, e.g., community-based insurance. This calls for the revision of the terminology and structure of ICHA-HF.
Key issues
Finding an adequate terms for ICHA-HF
Experience has shown that there is a great deal of ambiguity regarding the current terminology and definitions of ICHA-HF categories in the SHA Manual. It has already been agreed that the terms "source of funding" and "health care financing" used in SHA 1.0 are not unambiguous enough and should be replaced by terms that refers to the entity pooling resources and purchasing services (paying for services).
The categories under ICHA-HF represent different entities / arrangements for raising and pooling funds and purchasing health care. The distinction between categories of ICHA-HF centres on whether they have different rules, methods for fund raising and pooling resources. As a given organisation (e.g., a commercial insurance company) can operate different financing arrangements (both compulsory insurance and voluntary insurance), the categories of ICHA-HF should not be understood as organisations involved in financing health care.
The Joint Health Accounts data collection uses the terms "financing agent/ scheme". It should be discussed and decided which one is applied under ICHA 2.0.
Revision of the structure of ICHA-HF
The first step is to agree on the basic criteria to distinguish between different financing schemes. A paper presented at the 2006 Meeting of Health Accounts Experts [DELSA/HEA/HA(2006)7] proposed the following criteria: Mode of participation ( mandatory by law; mandatory by condition of employment; voluntary); Basis for benefit entitlement (based on a public law or a contract between an insurance carrier and the individual); Method for raising funds (general taxation, mandatory income-related insurance contribution, mandatory non income-related premium, out-of-pocket payments); and Mechanism and extent of pooling and re-allocation of contributions (For example: income-related contributions pooled at national level; mandated community rating of premium at national level; community rating of premium at financing agent level; risk-adjusted contributions; households direct payments).
After an agreement on schemes (or a modified version) as the key components of ICHA-HF, the following steps are to compose aggregate categories and, on the other hand, to define subcategories for each, if needed.
The two major aggregate components of the current version of ICHA-HF are General government (HF.1) and Private sector (HF.2). Due to recent changes in insurance schemes (e.g., Compulsory health insurance in Netherlands serves similar purpose as that of social security schemes,but can not be considered part of the General government sector.), this division has become inadequate. Emerging insurance and financing schemes can involve, at the same time, elements of what traditionally was considered as “public” and what was referred to as typical of the “private sector” from several perspectives, such as the nature of the institution managing the scheme, the regulatory framework underpinning the scheme, the sources of the funds used by the scheme, the methods for raising funds used by the scheme, the degree of obligation in participation in the scheme, and so forth. This can make the use of the terms ‘public’ and ‘private’, when referring to some financing schemes, ambiguous. This calls for the revision of the terminology and structure of ICHA-HF ([DELSA/HEA/HA(2006)7] proposed to replace "HF.1. General government" by “Compulsory social protection schemes”, as a temporary terminology and include: General government (excluding social security), Social security funds and compulsory private insurance. Under the SHA revision consultation process a wider debate among health policy and health accounts experts will be initiated on these issues).
Issues for clarification
SHA implementations have raised several specific issues for which the SHA Manual does not provide adequate guidance9. These can be grouped as follows:
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the interpretation of some key terms of health care financing, such as public vs. private, and social vs. private;
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the clarification of some terms currently used in health accounting (definitions of financing source, financing scheme and financing agent);
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accounting rules, such as treatment of tax subsidies; or hospitals' revenues from activities other than patient care, etc.
Earlier this year countries were invited to raise issues to be dealt with under the SHA revision. Among others, the need for clarification of private social insurance, NPISH as a financing agent; and the "Rest of the world" as a financing agent (HF.3) vs. as a financing source (FS.3) has been mentioned.
A further issue for clarification arises from the fact that several private insurance schemes do not directly contract providers, but reimburse (fully or partly) the medical bill of the patients. Because the actual payments to providers are made by patients, this causes some ambiguity in accounting for these payments. The proposed interpretation is that services are consumed (and their costs are covered) under the private insurance scheme, therefore they should be accounted under private insurance.
Several previous works can serve as important input to the preparation of this unit. Among others to mention: the paper on households out-of-pocket payments published by WHO; documents of the Tallinn workshop on health financing organised by Eurostat; recent World Bank publications on health financing, OECD's Interim report on the work on refinement of the SHA framework for health financing, etc.
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