HEALTHCARE FUNDING SYSTEM

Healthcare Funding System

Healthcare Funding System

Introduction

Health care systems are determined by the relations between the users, payers, providers and regulators. We will be analysing systems, one of which is the UK's National Health Service as an example of a public health system (PHS). (Jan, et al, 2005, 771)

Generally, PHS are funded through general taxation (such as compulsory insurance contributions and payroll tax). They are publicly owned, thus providing more public control over health spending and more responsive to public priorities. Providers are given a fixed annual budget to comply with. The service is free to users at the point of use and provides all citizens with the same access to equivalent care no matter how much they contribute. In some countries, like the UK, health workers are direct employees of the government.

Discussion

The NHS Plan revealed how funding, reform and modernisation of the NHS will “continuously improve its efficiency, productivity and performance”. Modernisation and reform( s) would be coupled to increased funding and the provision of additional physical resources for the NHS. Cash funding would be increased by 50% and in real terms by one-third over a period of 5 years reversing the pattern of earlier years where healthcare spending trajectories both in cash and real terms had been erratic 1 year to the next and consistently below OECD and European norms over an extended post-war period(Jamison, 2006, 21). Additional financial resources would convert into much needed physical resources including: extra beds, hospitals, GP premises, nurses, consultants and GPs who would be recruited into the healthcare system so as to deliver additional capacity to treat patients.

Additional funding would also be coupled to reforms which would include: redesigning the services provided by the NHS around the needs of the patient; offering patients a choice of hospital for elective treatment; and providing a flexible and responsive provision of health services from preventative to primary and secondary care. New contracts would be offered to nurses, doctors and consultants so as to increase labour process flexibility and productivity; for example, the number of consultants “entitled to additional discretionary payments will rise from half to two-thirds but in return they will be expected to increase their productivity while working for the NHS” (Jakab, Krishnan, 2001).

To establish a firm connection between funding, reform and performance organisation restructuring and new modes of governance would serve to decentralise regional and local autonomy and incentives would help ensure that efforts were directed towards intended outcomes. For example, in relation to GP contracts the NHS Plan observes that “the GP remuneration system has failed to reward those who take on additional work to make services more responsive and accessible to patients and to relieve pressures on hospitals” (Department of Health, 2000, p. 28). More generally the current system of managing the NHS does not provide the right sort of incentives because these are generally concerned with “squeezing more treatment from the same resources”. (Harding, Preker, 2004, 49)New Labour's objective within the NHS Plan was to shift the existing system ...