Investing in health and nutrition is important for individuals and governments. Recent research from the Macroeconomic Commission, the recent books on health and wealth (for example, Spence & Lewis 2009) and others suggests that better health does not have to wait for an improved economy. Measures to reduce the burden of disease, to provide maternal and early child care, provide children healthy childhoods and increase life expectancy will, in themselves, contribute to creating richer economies. Globally, countries tend to value health and spend relatively more on health (as a share of GDP) as GDP grows, and increase financial protection levels to reduce impoverishment against catastrophic costs.

This Note uses a conceptual framework of health financing that links with a broader view of health systems which are seen in terms of actors performing functions, with these functions being geared towards the health system achieving goals. The overriding goal is better health or improved outcomes. A second basic goal is financial protection. The ability to buy food and shelter should not be compromised by unforeseen (and largely unforeseeable health shocks that necessitate possibly large amounts of spending on health care. A third goal is responsiveness or patient satisfaction. It is important how well a health system responds to people’s nonmedical expectations, concerning things like being treated with dignity. The key actors in any health system include patients and households, health care providers, health financiers and insurers, and government. Subsidiary goals are efficiency and equity. Because demand for care is virtually unlimited it is important to spend wisely–both in terms of “doing things right” (technical efficiency) and “doing the right things” (allocative efficiency). While countries may not necessarily achieve full equity, they will strive for some acceptable level of inequality.

Within this framework of health systems, the Note outlines that the purpose of health sector financing is to generate sufficient and sustainable funds to motivate health care consumers, insurers and providers in a manner that societies optimize health outcomes and financial protection for their given spending level. The success of the financing process depends upon the performance of three important functions: • revenue collection; • pooling and management of resources; and • purchasing of services and interventions.
Following an assessment of the current macro-economic, health status, and health sector situation in the region, this Health Financing Note then follows these functions.