12. Financing Health Systems in the 21st Century

Abstract

Health financing policy in low– and middle–income countries is assessed for the basic functions of revenue collection, pooling resources, and purchasing services. These three financing functions translate into: (1) raising sufficient, affordable, and sustainable revenues efficiently and equitably; (2) equitably pooling health risks; (3) protecting individuals against catastrophic financial losses caused by illness and injury; and (4) assuring an allocatively and technically efficient purchase of health services. Health financing functions and policies are evaluated relative to how they promote the goals of improving health status, providing financial protection, and assuring consumer satisfaction.

This chapter reviews global evidence on health spending, health needs, revenue–raising capacity, the organization of health financing, and trends in development assistance for health. Country policy makers face key challenges in assuring access to essential services and financial protection, in a world defined by new instruments such as Sector Wide Approaches and Poverty Reduction Strategy Papers and new and relatively large global funding sources such as the Bill & Melinda Gates Foundation, the Global Fund to Fight AIDS, Tuberculosis, and Malaria, the Global Alliance for Vaccines and Immunizations/Vaccine Fund, and others. The assessment of these features and of low– and middle–income country health financing reform experiences points to needed changes in the global aid architecture.