Financing health and long-term care in Asia

‘Increasing age is frequently associated with increased health-care utilization and costs’ (World Health Organization 2019a). It is also associated with a higher risk for disability ‘as a result of an accumulation of health risks across a lifespan of disease, injury, and chronic illness’ (United Nations Department of Economic and Social Affairs n.d.). In the face of an ageing population, it is imperative for governments to establish effective mechanisms to ensure that older adults have access to health and long-term care (LTC) services without financial burden (World Health Organization 2019a). At present, however, ‘[cjnsuring universal coverage for health and long-term care for older people is still a distant ambition in many countries’ (World Health Organization 2019a) because many governments have limited financial resources and other funding priorities. Besides, health and LTC financing reforms are politically contentious. ‘Health financing reform often involves complex interactions among many stakeholders of varying positions, power, and influence, within the health sector and beyond’ (World Health Organization 2018). As regards LTC financing reform, it requires ‘navigating deep divides in society, from the social safety net to taxes to individual responsibility and private sector initiatives’ (Farrell 2016). In many cases, health or LTC financing reform encounters strong political opposition from vested interests.

The reform usually has to go through many years of experimentation, debates, and negotiations before it is finally implemented. The process can be costly, timeconsuming, and frustrating.

Health financing

The purpose of health financing is to provide sufficient funds for the operation of health systems (Schieber et al. 2006: 225), to set the right financial incentives for providers (World Health Organization 2000: 95), and to ensure that all individuals have access to needed healthcare services without the risk of severe financial hardship (often called financial catastrophe or impoverishment) (World Health Organization 2010b: 72). The three key functions of a health financing system are revenue collection, pooling of funds, and purchasing of services (World Health Organization 2010b: 72). Revenue collection refers to the sources of funds for healthcare (McIntyre and Kutzin 2012: 77). Funds can come from domestic sources (e.g. households, businesses) and external sources (e.g. donor governments or agencies) (Schieber et al. 2006; Health Policy Plus n.d.). Pooling of funds refers to the accumulation of prepaid healthcare funds so that members of the pool collectively share the financial risk of paying for healthcare (McIntyre and Kutzin 2012; Health Policy Plus n.d.). ‘Risk pooling addresses the unpredictability of illness, particularly at the individual level’ (McIntyre and Kutzin 2012: 77) and promotes equity, as those with greater ability to pay and those with lower health risks subsidize financially poor and high-risk individuals (Health Policy Plus n.d.). Purchasing of services refers to ‘the process of transferring pooled funds to healthcare providers to ensure that appropriate and efficient services are available to the population’ (McIntyre and Kutzin 2012: 77). Services can be purchased from public and private providers (Schieber et al. 2006). In theory, there are five types of health financing models around the world: tax-funded model, social health insurance (SHI) model, private health insurance (PHI) model, mandatory savings model, and out-of-pocket model. In reality, most countries or cities adopt a pluralistic approach to finance health care. In Asia, healthcare financing models are quite diverse in terms of their development (Kwon 2011: 651) due to differences in history, political, economic, and social conditions.

Tax-funded model

The tax-funded model funds healthcare through government tax revenues. Tax revenues can be collected by local, provincial, or national government authority on incomes, purchases, sales, property, corporation profits, land, and the like (Roemer 1976; Savedoff 2004). This model seeks to make health services available on a universal basis and pool both income and health risks (McKenna et al. 2017). It has the advantages of providing equitable access to healthcare, having simple and low-cost administration, and redistributing wealth from high-income groups to low-income groups (Food and Health Bureau 2008: 58-9). But the

Population ageinpi, financing, and LTC in Asia 5 major disadvantage of this model is the risk of unstable funding or underfunding because of competing public expenditures (International Labour Organization 2015). As the payer of healthcare, governments are likely to prioritize cost efficiency and containment (Blank and Burau 2007: 76) and ‘weigh tradeoffs between health and roads, education, defense and other public functions’ (Savedoff2004: 7). Countries or cities using this model or variations of it include the UK, Italy, Spain, the Nordic countries, New Zealand, Cuba, and Hong Kong (Reid 2009a, 2009b).