Universal health coverage not only protects the majority of the population from experiencing catastrophic financial loss as a result of high out-of-pocket costs, but also promotes better quality of services and greater health equity.
A key question facing most countries is how they can use health financing mechanisms to design and run affordable national health care systems.
According to the World Health Organization, 40% of private expenditure on health is out-of-pocket (OOP) in the Western Pacific, and over 60% in Southeast Asia. OOP spending takes the form of fees for services levied by public/private sector providers, copayments where insurance does not cover the full cost of care, or direct expense for self-treatment.
This over-reliance on OOP spending is the most regressive way to finance health, and reflects insufficient spending on health by many governments in both regions, resulting in limited pooling mechanisms and safety nets. This trend is also influenced by economic, technological and demographic trends that have implications on equity. Millions of people are driven into poverty due to their inability to pay for the health care they need, and fear of excessive expenditure.
Universal health coverage (UHC) not only protects the majority of the population from experiencing catastrophic financial loss as a result of high OOP costs, but also promotes better quality of services and greater health equity. This is demonstrated by access to good-quality services, with functioning referrals, and supported by appropriate technology and human resources. Equally important is having institutions equipped with enough resources to enforce the rules and put them into practice.
Achieving the UHC goal depends on the three health financing functions: mobilization of funds for health care in sufficient quantities, equitably and efficiently; pooling contributions to share the costs of health services and ensure easy access to finances when needed; and purchasing and/or provisioning, with contributions used to purchase or provide appropriate and effective health interventions in the most efficient and equitable way.
Public financing—mainly through taxation or social health insurance or a combination of the two—is the dominant form of prepayment financing, but the particular sources for funds and institutions for applying them differ. Both do provide the risk pooling and cross-subsidization which are essential for universal coverage, access and financial protection.
Thailand's health reforms include enrolment in insurance mechanisms, but the major thrust toward UHC has relied primarily on general revenues to a program that finances care provided predominantly in public health facilities. The Thai experience demonstrates that UHC is within reach even in relatively low-income settings, and highlights the critical role of the government and institutional capacity.
Mixed health financing arrangements with some type of taxation, prepayment contributions, copayments, user fees, targeted subsidies, involvement of private sector, and other safety net components can also provide good coverage and equal access.
In India, recent reforms have committed the government to mobilize more public revenues and dedicate them to expanding access to health care via the National Rural Health Mission, with a focus on primary care – and by establishing government-sponsored insurance for the poor. The government insurance schemes cover hospital care at empanelled public and private hospitals for the poor.
Most reforms towards UHC are gradual and can take between 20 and 30 years. During this transition period, population coverage often remains incomplete, and sometimes may even become more unequal. In order to achieve this long-term solution, flexible short-term responses are needed. The level of public financing must be sufficient to provide at least a basic package of necessary health services, and protect low-income households from catastrophic health expenditures.
UHC requires significant government intervention due to the existence of market failures and externalities. The optimal response depends on the nature of the risks, as well as the expected frequencies and costs of shocks they can finance from domestic sources in the short to medium term. One can also explore the role that community-based health insurance schemes, as well as micro health insurance, can play.
With increasing demand among the population for reliable access to acceptable health care at an affordable price, governments view UHC either as “too difficult to aim for”, or “too important to postpone”. ADB is uniquely placed to stimulate strong public-private partnerships for mobilizing and ensuring efficient use of resources, catalyzing novel solutions, promoting improved delivery systems, and developing local business models. We should actively consider assuming the first mover or market development costs and risks of products that may be of special interest to developing countries, by piloting or promoting them to help achieve better health for all.