Health financing is fundamental to the ability of health systems to maintain and improve human welfare. At the extreme, without the necessary funds, no health workers can be employed, no medicines would be available and no health promotion or prevention would take place. However, financing is much more than simply generation funds. To understand the nature of the indicators that can be used to monitor and evaluate health system financing, we require explicit assessment of what is expected to achieve.
In most low-income and many middle income countries, revenue collection is derived from both domestic and external sources. Despite the substantial increase in external assistance for health since 2000, the resources available to assure universal coverage are still insufficient in most low – income settings.
Financial risk protection is determined by how funds are raised and whether and how they are pooled to spread risks across population groups. It also needs to consider how to ensure access to needed services, while protecting people against the more severe financial consequence of paying for scare.
People pay into a pool when they are healthy, and can draw on these funds when sick. Pooled funds can come from tax or health insurance contributions and, in most countries, they come from a mix of both. Indicators in this area need to capture the extent to which people are protected from the financial risks associated with ill health.
Another main objective is to ensure efficiency in resource use. This is a complex covering questions about reducing waste and corruption. Designing interventions needed for utilising available resources, deciding between government or non-government sector of services, optimising the provider pay structure in order to ensure quality and efficiency and creating services to target the financially challenged, are some of the main issues that dealt with in this section. Due to its multiple dimensions, it is an arduous task to define a single and simple indicator to measure proficiency in health system financing.