HLTA03 Week 3 - Financing Healthcare

What is fiscal federalism?

The transfer of resources from the federal government to provincial governments

What are two ways the federal government transfers resources to provinces?

• Cash grants: direct funding, often w/ conditions

• Tax room: the federal government lowers its tax rate so provinces can raise theirs

What is the libertarian view of healthcare financing?

Healthcare is a good or service, and access should depend on ability to pay

What is the egalitarian view of health financing?

Access should depend on need, not income. Healthcare should be publicly financed.

What is healthcare financing?

How healthcare services are paid for

What is healthcare delivery?

How healthcare services are provided

What is public financing?

Healthcare paid for by government funding

What is private financing?

Healthcare paid for by individuals or private insurance

What is public delivery?

Services provided by public-sector organizations

What is private delivery?

Services provided by private individuals or organizations

Can financing and delivery be public or private independently?

Yes! A service can be publicly financed but privately delivered, or privately financed and delivered

Give examples of publicly financed and publicly delivered services

• Public health services & many public hospitals

Give examples of publicly financed but privately delivered services

• Physician services outside hospitals & some diagnostic services

Give examples of privately financed healthcare

• Dental care

• Vision care

• Rehabilitation

• Outpatient prescriptions

What is public healthcare financing?

Funding from general government revenue or taxes designated for healthcare

What is public or quasi-public social insurance?

An insurance system run by government or a heavily regulated organization.

What is private third-party insurance?

Private insurance that pays for services on behalf of individuals, such as dental insurance.

What is private out-of-pocket financing?

The individual receiving care pays directly for the service

What is the approximate public/private split of Canadian healthcare spending in the lecture notes?

Approximately 70% public and 30% private

Why can private healthcare payments reduce equity?

People with lower incomes may be unable to afford the care they need

What does the WHO recommend about when people pay for healthcare?

People should prepay through taxes or contributions rather than pay only when they become sick

What is risk pooling?

Combining contributions so healthcare costs are shared across a population

What are the three main functions of healthcare financing?

1. Revenue collection

2. Pooling of resources

3. Purchasing of interventions

What is revenue collection?

How money enters the healthcare system, such as through taxation

What is pooling of resources?

Combining funds to share the financial risk of healthcare costs

What is purchasing of healthcare interventions?

Using pooled funds to pay providers to deliver services

• pooled funds; collected in a population through taxation so that people aren’t solely paying out of pocket in the worst case scenario (when they’re sick)

  • (Think, investment when they’re healthy to prepare for when they aren’t because we all will eventually get sick)

What is passive purchasing?

The government pays healthcare providers w/ limited direction over which services are prioritized (“passive”)

What is strategic purchasing?

Actively directing funding towards services that best meet health needs and goals

What are the WHO’s key financing best practices from the lecture?

• Prepayment

• Risk pooling

• Equitable taxation

• Avoid fragmentation (don’t split funding into disconnected systems)

• Strategic purchasing

Why do we pool healthcare resources?

To lower costs, distribute risk, and improve financial equity

What are the economies of scale in healthcare?

Sharing resources across many people lowers the cost per person

How does pooling distribute risk?

Many people contribute, helping cover the high costs of people who become seriously ill

How does pooling promote financial equity?

It allows resources to be redistributed from wealthier people to poorer people

What does it mean that 1.5% of Ontario’s population accounts for 61% of hospital and home care costs?

A very small proportion of people account for a large share of healthcare spending

• (remember that everyone gets sick eventually, most people are “healthy” until they’re not, but pooling still helps to mitigate high fees towards end of life by preparing before that!!)

What is progressive health financing?

People with higher incomes contribute more according to their ability to pay

What is regressive health financing?

Lower-income people pay a larger proportion of their income than higher-income people

Why is progressive financing more equitable?

Contributions depend on ability to pay, helping redistribute resources to people with lower incomes

Why can flat fees be regressive?

The same fee takes up a larger proportion of a low-income person’s income

What are concerns about private healthcare delivery?

• Potential safety and quality problems

• Profit incentives

• Diversion of resources from public care

Why might private clinics not always improve healthcare quality?

Financial incentives may conflict with quality, & inadequate procedures can create safety risks

What is a resource drain in private healthcare delivery?

Private providers may draw healthcare workers & other resources away from the public system

What does the international evidence in the lecture suggest about for-profit delivery?

For-profit delivery has been associated with worse mortality outcomes in some studies

What is allocation in healthcare financing?

How resources flow from payers to providers and the incentives created by payment methods

Why do provider payment methods matter?

They influence how providers behave and which services they prioritize

What is cost-based payment in terms of how providers get paid?

Payment based on the cost of goods or services provided

What is time-based payment in terms of how providers get paid?

Providers are paid according to the time they spend working

What is fee-for-service in terms of how providers get paid?

Providers are paid for each service they perform

What incentive can fee-for-service create?

It can encourage providers to deliver more billable services

What is capitation?

A provider receives a fixed payment per enrolled patient, regardless of how often the patient visits

What incentive can capitation create?

It encourages cost control, but may discourage providing services more than necessary

What is pay-for-performance in terms of how providers get paid?

Providers receive bonuses for meeting specific performance targets

What is a global budget?

A fixed total amount of funding allocated to an organization, such as a hospital

What are the three main goals of public health?

• Prevent disease

• Promote health

• Protect populations

How is public health different from healthcare delivery?

Public health focuses on populations, while healthcare delivery primarily treats individuals

What are examples of public health system activities?

• Disease surveillance

• Food inspections

• Outbreak response

• Water-quality monitoring

• Vaccination promotion

What is generally NOT a public health system function?

Managing healthcare resources, such as staffing doctors and nurses or improving primary care

What is PHAC?

The Public Health Agency of Canada, established in 2004 to support public health

What is the WHO?

The World Health Organization, a United Nations agency responsible for global public health

What are the three provincial public health structures covered in the lecture?

• Alberta: centralized

• Quebec: regionalized

• Ontario: decentralized

How is Alberta’s public health system structured?

Centralized, with province-wide coordination through Alberta Health Services

What are the benefits of Alberta’s centralized system?

Clearer coordination, consistent messaging and potentially faster province-wide responses.

What are the limitations of Alberta’s centralized system?

Stronger political influence and less responsiveness to specific local concerns.

How is Quebec’s public health system structured?

Regionalized, with 18 regional public health departments.

What are the benefits of Quebec’s regionalized system?

Clear regional authority and better responsiveness to local needs.

What are the limitations of Quebec’s regionalized system?

Provincial oversight can limit regional autonomy, and roles may be unclear

How is Ontario’s public health system structured?

Decentralized, with 29 independent public health units.

What does Public Health Ontario do?

Provides public health expertise, research and laboratory services.

What is the role of Ontario’s Chief Medical Officer of Health?

Provides public health leadership and directs provincial strategy.

What are the strengths of Ontario’s decentralized system?

High local autonomy & responsiveness to community needs

What are the limitations of Ontario’s decentralized system?

Inconsistent local messaging and slower province-wide coordination.

What are the International Health Regulations (IHR)?

Legally binding international rules for detecting and responding to public health threats.

What must countries do under the IHR?

Establish responsible authorities, build surveillance & response capacity, and notify the WHO about relevant threats

What does PHEIC stand for?

Public Health Emergency of International Concern

Why must countries report a PHEIC?

To alert the international community to serious threats requiring coordinated action