Question

What are the two basic manners in which health care expenditures can increase?

Answer 1

Ans

Health care

Health is both a resource for, as well as an outcome of, sustainable development. The goals of sustainable development cannot be achieved when there is a high prevalence of debilitating illness and poverty. The amount of health expenditure is one of most important indicators of development.Health expenditure is an important determinant of the health status and economic development of a nation.recognition to this aspect have healthier and more productive human capital. This in turn raises the GDP of a nation, in contrast to countries which spend less on health sector.

Expenditure on health sector therefore has higher return in terms of health outcomes and economic development in poor and developing countries in comparison to already developed countries.The present work with the help of data from all the states and union territories of India examined the impact of per capita health expenditure on infant and child mortality separately for the urban and rural sector of India using lagged multiple regression models. The findings of the study reveal that health expenditure taken alone do not have any impact on the health parameters.

Globally the total amount of expenditure on health is increasing as countries are becoming richer. While it is useful to know what drives health expenditure increases, it is important for policymakers to know whether increased spending on health facilitates achieving universal coverage, and ultimately improves people's health. This study provides insights on the current policy dialogues in countries, particularly on health systems financing. Income is not the sole factor associated with health expenditure. A country's income plays an important role on how much can be spent on health by both governments and households. However, it is not the only factor. There are huge variations in health expenditure among countries which have a similar level of income. For low income countries where health expenditure is lower than the minimum required to provide very basic services, great effort is needed to make more resources available for heath from both public and private sources. Countries with high health expenditure may need to find ways to increase the value they are getting for their money.

External resources

for health are essential for low income country although they may reduce government spending on health from domestic sources. For low income countries, external aid counts for more than 20% of national health expenditure on average. Currently, external resources on health are mainly through health specific funds (sectoral and program supports). While health ministries receive external funds, the ministries of finance reduce the health budget. This has been generating intensive discussions on aid effectiveness. Among other reasons, fungibility is one of the reasons for proposing another aid modality- general budget support. However, early evidence did not show that general budget support was more efficient than health specific support in terms of increase overall resources on health (Antunes et al. 2010). Our results confirmed the existence of fungibility, but the substitution was much less than dollar to dollar replacement. Hence, overall spending on health increases with higher external assistance. Our results also showed that the increase in external aid on health increased the out-of pocket payments in some lower-middle income countries. This would relate to how external funds are channeled and how are they used.

Different health financing mechanisms

do not have different impacts on total health expenditure. The way a health system collects revenue such as prepayment or out-of-pocket payments, has great importance on financial protection and access to services. In this study we did not find a robust relationship between the level of prepayment and total health expenditure. Indeed, given the same level of economic development, a country does not necessarily spend more on health when prepayment is the dominant funding source. Similarly, whether a system adopts a tax-based or insurance-based scheme has no difference in its total health expenditure. Indeed the two systems co-exist in most countries. Revenue collection methods are not necessarily associated with a specific arrangement of fund pooling, service provision and purchasing. Efforts should be made to improve the efficiency and equity of the system instead of the ideological debate.

Financing is one of the most important elements of health system. Knowledge of factors associated to health expenditure would help policy makers to better plan for the future. From this study we found a general increase in health expenditure during the period of 1995 and 2008. However, this increase may not be able to continue for some countries in the coming years. The current economic crises will not only have impact on health systems in developed countries but also in developing countries where external funding is essential. Innovative financing methods as well as improving efficiency will be important for increasing resources for low income countries to provide basic services and for high income countries to retain the progress that has made on universal coverage.