Introduction to Health Systems The country with the best health system is…

Outline What is a health system? Comparing systems around the world The medical care triad Issues in medical systems

What is a health system? World Health Organization A health system consists of all organizations, people and actions whose primary intent is to promote, restore or maintain health. This includes efforts to influence determinants of health as well as more direct health-improving activities.

Functions, Performance, and Impact Does health care uphold our values as society? Both level and distribution

Layers of a Health System Social interventions (education) Other health interventions (cigarettes, motor vehicle safety) Medical care

The Structure of a Medical System

The Continuum of ‘Horizontal’ and ‘Vertical’ Programs

An example of a vertical health programs Supervision Program Supervision Program Supervision Program Supervision Maternal Health Child Health Tuber-culosis HIV/ AIDS Local Health Center

An Example of an Integrated Medical System

Example: India vs. the US Public sector Hospitals (excellent academic hospitals  small community health centers) Great but hard to access Waiting lines Absenteeism Private sector Some legit but lots of untrained and unregistered practitioners Short visits and very high rate of Rx prescriptions Much of it is a waste of money United States Most of population is insured (increasingly so) Public and private (employer-based) High cost sharing inhibits use even for insured Provision is almost entirely private High quality but not coordinated Efficiency suffers

Health care resources: Dollars US is 1/7 of world health spending

Health care resources: People Physicians: average = 14 / 10,000 24 MDs/10,000 .1 MD/10,000

Nurses & midwifes per 10,000

The Economics of Medical Systems

Most Markets Buyer (patient) Seller (provider) Goods Money QR24, Fall 2005, Lecture 10 Most Markets Buyer (patient) Seller (provider) Goods Money

The Medical Care Triad Insurer Patient Provider QR24, Fall 2005, Lecture 10 The Medical Care Triad Insurer Patient Provider

Why Involve Insurance Risk Help with management Medical spending is large and unpredictable Help with management Advice about what to get, where to get it, who to do it In some cases, insurance is informal (e.g., family or village)

Distribution of Medical Spending

Functions of a Medical Care System QR24, Fall 2005, Lecture 10 Functions of a Medical Care System Insurer Revenue collection (Get money from people to insurers) Payment rules (Determine how providers are paid) Patient Provider Access rules (Determine what providers people are allowed to see.)

Methods of funding medical care QR24, Fall 2009 Methods of funding medical care General taxation  Private health insurance Out-of-pocket payments Charity

Tax and insurance systems are fundamentally similar $ Tax, or insurance premium net of subsidy Avg medical costs $6,000 What people earn

Importance of Different Financing Methods by National Income

Out of Pocket Spending

Premiums (private) and US v. Canada Revenue collection Premiums (private) and taxes (public) Taxes Coverage ~10% uninsured Universal coverage

Ways to Pay Doctors (Or Anyone Else) QR24, Fall 2005, Lecture 10 Ways to Pay Doctors (Or Anyone Else) Degree to which reimbursement reflects costs (pay for costs) (fixed pay) Fee-for- Salary Capitation Service (FFS) Salary with bonus

US v. Canada Revenue collection Premiums (private) and taxes (public) Coverage ~10% uninsured Universal coverage Payment Payment per service (FFS); Salary or capitation (HMOs) Payment per service (FFS)

Access Rules All goods, everywhere, are rationed. The question is how, and how well is it done. Very big differences across countries. US used demand-side rationing (at least historically); other countries used supply-side rationing.

Access Rules “Micro” rules “Demand-side” (applies to patient) QR24, Fall 2005, Lecture 10 Access Rules “Micro” rules “Demand-side” (applies to patient) The price the patient pays is low or high Services may be covered or not (Rx drugs) “Supply-side” (applies to MD) Need permission to see a specialist? Are physicians paid for doing things? “Macro” rules “Supply-side”: Is access to technology constrained?

US v. Canada Revenue collection Premiums (private) and taxes (public) Coverage ~10% uninsured Universal coverage Payment Payment per service (FFS); Salary (HMOs) Payment per service (FFS) Access - Micro Cost sharing (FFS); Utilization review (HMO) Few - Macro Supply limits

Differing Perceptions of Health Systems

An Overall Ranking (?) – World Health Organization, 2000 France Italy San Marino Andorra Malta Singapore Spain Oman Austria Japan Denmark Dominica Costa Rica US Slovenia Cuba Brunei

Issues in Medical Systems

Health Around the World Developing countries Developed countries Combatting infectious diseases (HIV/AIDS) Dealing with incipient chronic diseases (mental health impairment, obesity, smoking) Developing a health system Balancing cost, quality, and access The mismatch between what can be done and what should be done. Reforming the health system