

National Health Insurance Risk Pooling in the Public Sector Download Full NHI Policy Brief 8 PDF Document The same issues about risk pool size affect all healthcare purchasers, whether public or private. The need for risk adjustment across different pools is also a feature of public systems. Rice & Smith give several examples where there is formal risk-adjustment between public sector pools: “The archetype of the centralized public sector system is the National Health Service found in the four countries of the United Kingdom. Such systems are intended to overcome some of the market failures usually associated with health care, and are usually funded out of general taxation. They attach a high priority to notions of equity, especially in the sense that all citizens should enjoy equal access to health care according to health care needs, rather than on the basis of any other personal characteristics such as income, employment status, or area of residence. The management of such systems is usually organized on a geographical basis, and the main purpose of risk-adjusted capitation is to offer local areas the means to secure uniform national health care objectives. Other examples .... are from Italy, New Zealand, the state of New South Wales in Australia, and Alberta Province in Canada.” “In devolved public sector systems, the management of health care is devolved from a national (or state) level of government to a lower tier of local government. Some or all health care is then funded by local taxes. If such devolution were complete, and a uniform package of care were specified, then local taxes would bear the entire burden of local need for health care, and would therefore depend on the health status of the local population and the size of the local tax base. In practice, this would result in great variations in local health care taxation. All such systems view the consequent variations in taxes as unacceptable, and so some intergovernmental transfers are effected, based on risk-adjusted capitation payments. The intention is to offer local areas the opportunity to levy a standard level of tax while delivering a standard package of health care. Examples ... are from Denmark, Finland, Norway, Spain, and Sweden”. “In many nations, the equitable distribution of health care resources plays a central role in securing widespread support for health services funded out of general taxation, and explicit equity objectives underlying health care capitation are therefore most frequently found in centrally controlled public sector health care systems. Examples of such objectives are: “to monitor progress towards the achievement of fairness in health funding”—New South Wales Resource Distribution Formula “to overcome territorial inequalities in social and health conditions” (Italian regional resource allocation mechanism) “to divide up funding equitably between the four . . . regions” (New Zealand Population Based Funding Formula) “to secure equal opportunity of access to those at equal risk” (English resource allocation formula) “These objectives reflect two concerns: to secure equity of health, and to secure equity of access to health care. The former objective is largely rhetorical, and few practical attempts have been made so far to adjust capitation payments in order to address inequalities in health .... In practice, seeking to offer equal access to health care to those in equal need has hitherto been the equity objective - either explicit or implicit - underlying almost all schemes”. << Back to NHI Project List	Contact Details: Innovative Medicines SA Val Beaumont P.O. Box 2008 Houghton, 2041 Tel: +27 11 880-4644 Fax: +27 11 880-5987 Contact Us! Corporate Social Responsibility Projects of IMSA Member Companies Copyright / Disclaimer

National Health Insurance
Risk Pooling in the Public Sector

Download Full NHI Policy Brief 8 PDF Document

The same issues about risk pool size affect all healthcare purchasers, whether public or private. The need for risk adjustment across different pools is also a feature of public systems. Rice & Smith give several examples where there is formal risk-adjustment between public sector pools: “The archetype of the centralized public sector system is the National Health Service found in the four countries of the United Kingdom. Such systems are intended to overcome some of the market failures usually associated with health care, and are usually funded out of general taxation. They attach a high priority to notions of equity, especially in the sense that all citizens should enjoy equal access to health care according to health care needs, rather than on the basis of any other personal characteristics such as income, employment status, or area of residence. The management of such systems is usually organized on a geographical basis, and the main purpose of risk-adjusted capitation is to offer local areas the means to secure uniform national health care objectives. Other examples .... are from Italy, New Zealand, the state of New South Wales in Australia, and Alberta Province in Canada.”

“In devolved public sector systems, the management of health care is devolved from a national (or state) level of government to a lower tier of local government. Some or all health care is then funded by local taxes. If such devolution were complete, and a uniform package of care were specified, then local taxes would bear the entire burden of local need for health care, and would therefore depend on the health status of the local population and the size of the local tax base. In practice, this would result in great variations in local health care taxation. All such systems view the consequent variations in taxes as unacceptable, and so some intergovernmental transfers are effected, based on risk-adjusted capitation payments. The intention is to offer local areas the opportunity to levy a standard level of tax while delivering a standard package of health care. Examples ... are from Denmark, Finland, Norway, Spain, and Sweden”.

“In many nations, the equitable distribution of health care resources plays a central role in securing widespread support for health services funded out of general taxation, and explicit equity objectives underlying health care capitation are therefore most frequently found in centrally controlled public sector health care systems. Examples of such objectives are:

“to monitor progress towards the achievement of fairness in health funding”—New South Wales Resource Distribution Formula
“to overcome territorial inequalities in social and health conditions” (Italian regional resource allocation mechanism)
“to divide up funding equitably between the four . . . regions” (New Zealand Population Based Funding Formula)
“to secure equal opportunity of access to those at equal risk” (English resource allocation formula)

“These objectives reflect two concerns: to secure equity of health, and to secure equity of access to health care. The former objective is largely rhetorical, and few practical attempts have been made so far to adjust capitation payments in order to address inequalities in health .... In practice, seeking to offer equal access to health care to those in equal need has hitherto been the equity objective - either explicit or implicit - underlying almost all schemes”.

<< Back to NHI Project List

Contact Details:

Innovative Medicines SA
Val Beaumont

P.O. Box 2008
Houghton, 2041

Tel: +27 11 880-4644

Fax: +27 11 880-5987

Corporate Social Responsibility Projects of IMSA Member Companies

National Health InsuranceRisk Pooling in the Public Sector

Contact Details:

National Health Insurance
Risk Pooling in the Public Sector