Course Title: Graduate Course on Health Financing

Instructors Manual

Week 10: Health Financing and Universal Health Coverage

(UHC)
Topic: Principles of UHC
Total time 180 min (Lecture time 120 min, 40 min discussion, 20 min break)

Chapter Theme

After attending the lecture, students will have a comprehensive understanding of several key
aspects related to Universal Health Coverage (UHC). Firstly, they will be able to articulate
the fundamental principles that underpin UHC, grasping the concept of ensuring that all
individuals and communities have access to essential healthcare services without enduring
financial hardship. Secondly, students will gain insight into the pivotal role of health
financing in realizing UHC goals. They will comprehend how revenue generation, risk
pooling, strategic purchasing, and effective resource allocation are vital components in
establishing sustainable and inclusive healthcare systems. Moreover, students will delve into
real-world applications through case studies of countries that have successfully achieved
UHC.

Lecture outline

Definition of Universal Health Coverage

- Explain UHC (10 min – Cumulative Total 10 min)
- Explain diagram, on slide 3 (05 min – Cumulative Total 15 min)
- The universal coverage “cube” (20 min - Cumulative Total 35 min)
- Topic to stimulate class discussion (see topic 1 below -10 min Cumulative Total
10 min)

Role of health financing in achieving UHC

- Role of Health financing in achieving UHC (10 min - Cumulative Total 45 min)
- Explain example (05 min - Cumulative Total 50 min)
- Topic to stimulate class discussion (see topic 2 below -10 min- Cumulative Total
20 min)

UHC Intermediate Goals

- Equity/ Efficiency in Resource Distribution: (10 min - Cumulative Total 60 min)
- Transparency and Accountability (10 min- Cumulative Total 70 min)
- Topic to stimulate class discussion (see topic 3 below -10 min- Cumulative Total
30 min)
UHC final coverage goals

- Utilization Relative to Needs (5 min- Cumulative Total 75 min)

- Financial Protection and Equity in Finance (5 min- Cumulative Total 80 min)
- Quality (5 min- Cumulative Total 85min)
- Topic to stimulate class discussion (see topic 4 below -10 min - Cumulative Total
40 min)
Linking health financing with UHC intermediate and final coverage goals.
- Direct effect of financing on the objectives and goals ( 10 min - Cumulative Total 95
min)

- Indirect effect of financing on the goals ( 10 min - Cumulative Total 105 min)

Policy options in health financing for UHC.

- The world health report 2010 (5 min- Cumulative Total 110 min)
- Explain examples ( 10 min - Cumulative Total 120 min)

Topics to Stimulate Class Discussion

1) Which is Pakistan's first province to introduce universal health coverage for all
residents?

In line with the WHO recommendations on UHC, the provincial government of the Khyber
Pakhtunkhwa (KP) first started the 'Sehat Sahulat Program' (SSP), literally 'Health Facility
Program', under the umbrella of Universal Health Coverage (UHC) in 2015.

2) How does the privatization of healthcare services affect the goal of Universal Health
Coverage, and what are the trade-offs between public and private financing in
healthcare?

Privatization can provide efficiency and innovation in healthcare, but it can also lead to
unequal access and high costs. Achieving UHC requires a balance between public and private
financing. Countries need to regulate and monitor the private sector to ensure that it aligns
with UHC goals and does not undermine equitable access

3)How does the global community play a role in supporting health financing and
Universal Health Coverage in developing countries?

The global community can support health financing and UHC in developing countries
through development assistance, knowledge sharing, and technical expertise. International
organizations, donor countries, and NGOs can provide financial and technical support, help
build capacity, and advocate for policies that promote equitable access to healthcare in low-
resource settings.
4) What are some Pros and Cons of Progressive Taxation System?
List of the Pros of Progressive Tax
1. It places the majority of an economic burden where it belongs.
2. It allows everyone to invest into their country.
3. It produces more total income.

List of the Cons of Progressive Tax

1) It is a system which encourages inequity.
2) It still impacts low-income earners in an unhealthy way.
3) It costs more to implement.

POINT/COUNTER-POINT:
1) Point: Improved Health Outcomes

Countries with UHC tend to have better health outcomes and longer life expectancies. By
ensuring access to essential healthcare, UHC reduces mortality rates, improves child and
maternal health, and enhances the overall well-being of the population.

Counter-Point: Potential for Bureaucracy and Inefficiency

UHC systems can introduce bureaucracy and administrative complexities, which may slow
down decision-making and resource allocation. Excessive regulation and centralization can
hinder innovation and responsiveness in healthcare delivery.

Reference material for this lecture

Case study

Case study of Sri Lanka – achieving pro-poor UHC

General overview
Sri Lanka’s healthcare system boasts a remarkable history of exemplary performance, positio
ning the country as a global leader in indicators such as infant mortality. No nation with a co
mparable income level achieves better outcomes. Essential services like antenatal care, institu
tional deliveries, and childhood immunizations exhibit nearly 100 percent coverage within Sri
Lanka.
The backbone of Sri Lanka's healthcare system lies in its government health system, offering
free services to the entire populace at public facilities. Funded by general tax revenues, these
resources are meticulously managed by the Ministry of Health (MoH) and its nine provincial
counterparts. This system mirrors the classic Beveridge "national health service" (NHS) mod
el, closely associated with postwar Great Britain. Differing significantly from the classic NH
S model, Sri Lanka’s system incorporates a private sector funded through out-of-pocket paym
ents and primarily staffed by off-duty government doctors.
A robust network of government health facilities is in place, divided into preventive and curat
ive care networks. These government facilities handle around 50 percent of all outpatient visit
s, 95 percent of hospital stays, and almost 100 percent of preventive healthcare. Preventive se
rvices are efficiently delivered through a meticulously planned network led by Medical Offic
ers of Health. Each officer oversees a specific geographic area, catering to a population rangi
ng from 50,000 to 100,000.
Despite this strong infrastructure, the curative care network is less organized, lacking a referr
al system. Consequently, patients often bypass smaller medical institutions, particularly in rur
al areas with minimal facilities, in favor of secondary and tertiary care. This phenomenon, hig
hlighted in the Ministry of Health’s Annual Health Bulletin, results in the underutilization of
smaller facilities and overcrowding in larger institutions.
Pharmaceutical procurement is a challenge for the government, which struggles to acquire an
adequate quantity of drugs due to budget constraints. The State Pharmaceutical Corporation h
andles the purchase of drugs for the public sector through global tendering, emphasizing gene
ric and bulk purchasing. However, these efforts fall short of meeting the population's demand
s.
In addition to the government system, the private sector plays a pivotal role in Sri Lanka’s he
althcare equilibrium. Predominantly funded by out-of-pocket spending, it is mainly staffed by
off-duty government doctors legally engaging in dual practice.
Crucially, Sri Lanka's journey towards Universal Health Coverage (UHC) emphasizes suppl
y-side efforts for robust service delivery. This approach underscores the indispensability of su
pply-side reforms, proving that health financing reforms alone are insufficient to achieve UH
C.

Health Financing in Sri Lanka:

 Sri Lanka has undertaken limited health financing reforms, which is noteworthy as
significant reforms are often linked with the path to Universal Health Coverage
(UHC).
 The major sources of health financing in Sri Lanka are the government budget and
out-of-pocket payments, constituting over 90 percent of total health expenditures.
Social health insurance is absent, except for a small scheme for civil servants named
Agrahara. Additionally, voluntary prepayment schemes contribute about 6 percent to
total health spending. External aid plays a minor role in the financing landscape. In
2013, total health expenditure per capita was approximately US$97.
 While Sri Lanka’s government health spending as a share of GDP is relatively low
compared to regional standards, it absorbs about 8.4 percent of the government
budget, a figure only slightly lower than the average among Asian comparators. Out-
 of-pocket spending constitutes around 40 percent of total health expenditures, which
aligns with the average for its income level.
 Addressing the needs of an aging population requires additional revenue mobilization
in the long term. However, limited fiscal space options exist due to low tax revenues.
Despite promising economic growth prospects, the extent to which this growth can
translate into additional spending is severely constrained. Overseas development
assistance plays a minor role. While efficiency gains are possible in all health
systems, Sri Lanka’s health system is already quite efficient, reducing the potential for
significant additional resources.
 In principle, Sri Lanka operates with a single health financing "pool" within the
government health system, allowing any individual to seek care at any government
facility. The entire government health system functions as the health coverage
program, based on the established government’s National Health Service (NHS) since
the 1930s. Thus, there is no specific program focus within the government health
system.
 Resource allocation in Sri Lanka is input-based, decoupled from the actual delivery of
health care services or population needs. Despite this, input-based financing has
proven effective as a cost-containment strategy. Some nonclinical services, such as
housekeeping, are outsourced. Additionally, there are recent initiatives involving
private hospitals to provide advanced care, such as cardiac surgery.
 Sri Lanka lacks a purchaser-provider split; financing and delivery are fully integrated.
The government funds and operates public facilities across the country.
 Output, performance, and results-based financing are absent in Sri Lanka's health
system. Hospitals have limited autonomy concerning key inputs like human resources,
and there is no accreditation system in place. Furthermore, demand-side interventions,
such as conditional cash transfers, have not been adopted.

UHC in Sri Lanka

 Covering people (who is covered)
o There is no system of explicitly targeting specific population groups and there
is no enrolment requirement to obtain care at government facilities. Residency
implies access to any and all government facilities in the country. Evidence on
utilization patterns suggests that access to care in the government sector is pro-
poor. The utilization patterns show that it is the better-off segment of the
population that is opting out of government services in favor of private
providers, especially in urban areas.
 Covering services (what is covered)
 o Sri Lanka offers a wide range of services, but does not have an explicit
benefits package defining the services available to the population. Sri Lanka
does have a comprehensive implicit benefits package, with a full range of
services (including even cosmetic surgery and costly oncology drugs for at
least some patients) provided to the population. Sri Lanka’s relatively high
service coverage is apparent in cross-country data. Almost 100 percent
coverage has been achieved for services such as antenatal care, skilled birth
attendance, and DPT3 (diphtheria, pertussis, and tetanus) immunization.
However, coverage of key NCD services lags behind. With respect to
“effective” coverage, existing studies suggest that the quality of outpatient and
inpatient care in the government sector in Sri Lanka is good. This includes the
key domains of history taking, examination, investigations, and management
 Financial protection (what proportion of costs are covered?)
o Out-of-pocket spending accounts for about 40 percent of total health
expenditures, but financial protection is quite good. This is largely because
most OOP spending is incurred by the rich. In total, nearly half of all OOP
spending is incurred by the richest decile, who spend almost three times more
per month than even the second-richest decile. The better-off also spend a
larger share of their total household expenditures on health. Meanwhile, the
entire bottom (poorest) 40 percent of the population spends on average less
than US$4 per month, or less than 2.5 percent of their total household
expenditures on health.
o Catastrophic health expenditures in Sri Lanka are more frequent among the
richer quintiles: about 4 percent of the richest decile faces catastrophic health
expenditures. Sri Lanka’s OOP spending does not translate into high
catastrophic and impoverishing expenditures because such a large share is
concentrated among the rich. Second, the level of OOP spending (about 1 to
1.5 percent of GDP) is lower than in many countries. In other words, the 40
percent OOP share appears high in part because government health spending
is itself low.

Class discussion
Q1: Considering the case study of Sri Lanka, can we argue that Universal Health Coverage
(UHC) can be achieved even with low spending on healthcare?
Q2: Has Sri Lanka adopted a demand or supply-side approach in its pursuit of Universal
Health Coverage (UHC)?
Q2: Does Sri Lanka have fiscal space to increase its health budget?
Q4: Do you believe that utilizing an input-based budget for compensating healthcare
providers offers any advantages to Sri Lanka?
Q5: What constitutes an implicit benefit package, and does it bring any benefits to the people
of Sri Lanka?
Q6: Is it accurate to say that out-of-pocket spending on health is always detrimental? Is this
statement applicable to Sri Lanka?