The financing dimension in SHA 2011 A focus on the Revenue of Schemes Patricia Hernandez WHO HA Geneva
The approach to revenues Pooling Financing agent (FA) Financing scheme (HF) Functions (HC) Institutional units of the economy providing revenues Basic structural relationships of health financing Money flow Focus of revenue collection Financing scheme (HF) Financing agent (FA) Financing agent (FA) Providers (HP)
Revenues of health financing schemes (FS) Revenues vs. Expenditures Revenue is an increase in the funds of a financing scheme Expenditure is the amount spent by the institutional units providing resources. FS classification highlights the sources and the mechanisms of revenue raising for each financing scheme. PG tracked Financing Sources = expenditure by entities; whereas SHA 2011 track Revenues linked to expenditure by financing schemes.
Classification of revenues of financing schemes (First digit) FS.1 Transfers from government domestic revenue (allocated to health purposes) FS.2 Transfers distributed by government from foreign origin FS.3 Social insurance contributions FS.4 Compulsory prepayment (other than FS.3) FS.5 Voluntary prepayment FS.6 Other domestic revenues n.e.c. FS.7 Direct foreign transfers Memorandum items Reporting items FS.RI.1 FS.RI.2 FS Related items FSR.1 FSR.2 Institutional units providing revenues to financing schemes Total foreign revenues (FS.2 +FS.7) Loans Aid in kind at donor value SNA based
Classification of revenues of financing schemes FS.1 FS.1.1 FS 1.2 FS.1.3 FS.1.4 FS.2 FS.3 FS.3.1 FS.3.2 FS.3.3 FS.3.4 FS.4 FS.4.1 FS.4.2 FS.4.3 FS.5 FS.5.1 FS.5.2 FS.5.3 FS.6 FS.6.1 FS.6.2 FS.6.3 FS.7 FS.7.1 FS.7.2 FS.7.3 Transfers from government domestic revenue (allocated to health purposes) Internal transfers and grants Transfers by government on behalf of specific groups Subsidies Other transfers from government domestic revenue Transfers distributed by government from foreign origin Social insurance contributions Social insurance contributions from employees Social insurance contributions from employers Social insurance contributions from self-employed Other social insurance contributions Compulsory prepayment (other than FS.3) Compulsory prepayment from individuals/households Compulsory prepayment from employers Other compulsory prepaid revenues Voluntary prepayment Voluntary prepayment from individuals/households Voluntary prepayment from employers Other voluntary prepaid revenues Other domestic revenues n.e.c. Other revenues from households n.e.c. Other revenues from corporations n.e.c. Other revenues from NPISH n.e.c. Direct foreign transfers Direct foreign financial transfers Direct foreign aid in kind Other direct foreign transfers (n.e.c.)
Classification of revenues of financing Memorandum items Reporting items FS.RI.1 FS.RI.1.1 FS.RI.1.2 FS.RI.1.3 FS.RI.1.4 FS.RI.1.5 FS.RI.2 FS Related items FSR.1 FSR.1.1 FSR.1.2 FSR.2 schemes Institutional units providing revenues to financing schemes Government Corporations Households NPISH Rest of the world Total foreign revenues (FS.2 +FS.7) Loans Loans taken by government Loans taken by private organisations Aid in kind at donor value
Key indicators CHE by revenue of scheme Transfers from Government current expenditure (internal and external origin) Social insurance contributions Prepayment (compulsory and voluntary) Other domestic revenue Direct foreign transfers (in cash and in kind)
Key indicators (ctd) CHE by origin of the revenue: Memorandum Items: institutional units Government current expenditure (internal and external) Corporations Households NPISH RoW CHE by revenue for schemes: cross-classified HF Government schemes & Compulsory health insurance Voluntary schemes Oops ROW
Structure of the classification The classification refers to the mechanism directly channeling the resources to the scheme e.g. transfers by government from foreign origin Additional layers can be added to existing categories when needed Example: FS.1.1 Internal transfers and grants FS 1.1.2 Internal transfers and grants from general revenues FS.1.1.3 Internal transfers and grants from earmarked tax
Multiple financing paths example of government flows
Revenue-Expenditure FS may show discrepancies between revenues received and payments made Although a difference can be estimated for revenue and expenditure, the full assessment of a financial condition of a scheme results of more information (EU and GFS rules) Important to identify the revenue used The RMNCH and other initiatives require revenue amounts related to the expenditure by schemes "how was the burden of the expenditure distributed?"
Public Private mix "Compulsory" revenues are treated as governmental. "Compulsory" reflects a public intervention resulting in a regulated financial structure Compulsory = public intervention "Voluntary" implies a discretionary use of resources, out of regulation, out of government direct intervention Private decision on use of resources It involves both public and private resources Voluntary = non - governmental
Public Private in SHA 2011 From the perspective of financing scheme: participation in a scheme is compulsory or voluntary From the perspective of the revenue: payment of revenue is compulsory or voluntary In SHA 2011 ownership is not the basis of analysis
The role of foreign resources Most resources are released by agencies acting as residents (SNA): A focus on local health, staying one year or more With cooperation and interaction with MoH (Paris agreements) Foreign agencies without minimal or not interacting nationally, are not residents: RoW Example: WHO HQ WHO country office
About loans Loans are not a real increase of the funds (they have to be repaid + they have a cost), they are reported as memorandum item Loans are recorded only on the amount used during the accounting period Debt forgiven as well as low interest loans (concessional and other quasi-grants) are recorded as RoW (FS.7)
About transfers In kind transfers are included and valued at current market prices. E.g. foreign technical assistance. The viewpoint of originators can be recorded below the line. Conditional health cash transfers are recorded as governmental, because recipient households cannot make a discretionary use of them Non conditional health transfers are excluded. They are recorded when spent / used by households on health care.
General Government Public Sector Government = GFS public sector includes public corporations & other non budgetary entities National labels may not be equivalent to those in SHA 2011: One "insurance" can nest several schemes A label "insurance" can represent a governmental scheme NPIs are classified as part of government based on criteria (not only one, not all needed): Government appoints officers Contractual agreements with government Degree of financing by government Other provisions (discretionary use of funds for other purposes) Risk exposure
Coverage of the Government Sector reflected in reports Source: GFS 2011 manual
Data Collection issues Preparatory work for SHA 2011 framework Data may still be collected from financing agents when there is third party involvement: shift from agent (SHA 1.0) to scheme (SHA 2011). Only health components are kept, and should be treated by scheme Surveys and other instruments need to be adjusted added complexity and detail to the surveys/records to cover from revenues to allocation, fund management and agents involved special effort to cover more relevant funds (size, role) need of detail to allow the consolidation of flows.
Intermediation Agencies with no active role between allocation resources to health and paying for health services may operate, frequently to transfer resources Their intervention frequently involves an overhead or transaction costs important to capture Accounting for them is proposed based on documented reports or allocation based on administration costs
Estimation issues Earmarked revenue is recorded directly to schemes. Non-earmarked revenue of government is allocated through a budgetary decision Non earmarked revenue has to be registered considering information available. In the absence of any additional information, one approach is to assume the same distribution of the health system spending: all spending had a revenue Or same distribution of allocation on health as in the state budget as a whole: e.g. foreign revenue non earmarked for health Keep in mind the objectives: e.g. to identify distribution of the burden of revenue used
Guidelines / References In addition to SHA 2011, PG, SHA 1.0 Some revenue guidelines on the IMF Government Finance Statistics Manual (including compilation guide for developing countries)
Exercise Identify the revenue modalities existing in your country and mark those more relevant Continue the exercise for schemes and list the related revenue types for each scheme Identify their potential data sources Which revenues can be considered public, which private and which are external?