What are the advantages of using taxation to finance health care?
Tax-financed health care systems are those in which most health expenditure is derived from tax payments or at least the tax-financed component is substantially larger than any other component. The most clear-cut difference among health financing systems is how they apportion the total cost of health care among the national population. Tax financing includes this burden within the general tax system; in most high-income countries, tax liability is roughly proportional to income or mildly progressive. People with higher income thus contribute, through tax financing, a share of their incomes that is the same as, or larger than, that contributed by lower income people. In principle tax financed systems make it possible for people who need care to get what and they need and when they need them. Tax-financed systems are greatly debated and there is a tension between the economic interests of the healthy and wealthy and those of the unhealthy and unhealthy. Wealthy people will always derive short term economic benefit from a system with more private financing. They have the resources to meet their own needs, and the less they have to contribute to support that of others, the more they benefit economically. The unhealthy and unhealthy can be counted on to oppose private financing which confronts them with wither very heavy financial burdens or some exclusion from care.
It is widely agreed that out-of-pocket spending on health disadvantages lower-income groups. It may even lead individuals to not seek or to discontinue treatment, this possibly aggravating a medical condition that may then require more complicated or expensive treatment. In societies where there majority of the people are poor and cannot afford to pay for health care services out of their pockets, the most socially acceptable health care finance system is tax-financed health system. Tax-financed national health systems provide universal access to the same package of benefits for all citizens. But to function well, they require adequate and sustainable fiscal resources, which are rarely guaranteed in lower-income countries.
Tax-Expenditure Subsidies
Governments have several mechanisms, both fiscal and regulatory, by which to influence patterns of economic activity. Tax financing for health care involves raising revenue through various compulsory contributions to state revenue and then using that revenue either to provide or to pay for health care. Public authorities may also use the taxing power to exert influence more indirectly by offering relief from taxes that would otherwise be owed. Private expenditure on favored activities may be deducted from taxable income or credited in whole or part against other tax liabilities. Tax-expenditure subsidies do not show up in public expenditure or as tax financing for health care but rather reallocate tax liabilities from people who have made expenditure in the favored categories to people who have not.
It is said that tax-financed systems yield high health progressively which implies that those in highest need enjoy good service. Taxation is generally the most progressive method for funding health care. However, it is only progressive as the overall system. Taxation centered on income-related taxation, particularly those with higher tiers of taxation for high incomes, are more progressive than those centered on method of indirect taxation (such as value added tax). Universal, tax-financed health care requires higher-income people to contribute more to support the system, without offering them preferred access or a higher standard of service. Private financing reduces the burden on the wealthy because they are healthier. Private payments limit access by people with lower incomes and thereby open better access for those willing and able to pay
Can health promotion campaigns effectively reduce the pressures on NHS?
Fundamental for reinforcing the issue of empowerment in respect of health, the defined health promotion as ‘the process of enabling people to take control over and to improve their health’, and identified five key levers which health promotion should employ:
1 Building Healthy public policy
2 Creating supporting environments
3 Strengthening community action
4 Developing personal skills and capacities
5 Reorienting health services (2003)
Objectives of Health Promotion
1. Advocate
Good health is a major resource for social, economic and personal development and an important dimension of quality of life. Political, economic, social, cultural, environmental, behavioral and biological factors can all flavour health or be harmful to it. Health promotion action aims at making these conditions favorable through advocacy for health.
2. Enable
Health promotion focuses on achieving equity in health. Health promotion aims at reducing differences in current health status and ensuring equal opportunities and resources to enable all people to achieve their fullest health potential. This includes a secure foundation in a supportive environment, access to information, life skills and opportunities for making healthy choices.
3. Mediate
Health promotion demands coordinated action by all concerned; by the governments, by health and other social economic sectors, by nongovernmental and voluntary organization, by local authorities, by industry and media.
Health promotion initiatives are widely viewed as an approach to reducing the economic pressures health ministries such as NHS. There are studies that reveal that lifestyle-related chronic diseases account for an estimated 70 percent of the nation’s medical care costs. Unhealthy lifestyle often lead to chronic disease, many of which cannot be cured and require years or decades of expensive treatments. Health promotion improves health and yields major economic savings. Health promotion is a promising approach to national health improvement. Hundreds of studies have confirmed that lifestyle factors are detrimental to health and that health promotion programs can change knowledge and behavior, prevent or delay the onset of disability and disease, and enhance the quality of life. A growing research base also supports the positive impact of health promotion programs on medical utilization and costs, as well as worker absenteeism, productivity and other variables of economic interest ( 2006). When health is measured by the length of life and the quality of that life, the urgency of prevention and health promotion cannot be ignored. Much of the expenditures in health in countries such the United States and the United Kingdom ca be attributed to the diagnosis and treatment of chronic diseases and conditions such as diabetes, obesity, cardiovascular disease and asthma. A much smaller amount is spent on preventing these conditions. Expenditures for healthcare continue to rise each year. However, a much smaller amount of money is spent on health promotion (prevention). Over the years, studies have shown that much of the morbidity and mortality associated with conditions such as diabetes, obesity, and cardiovascular diseases may be preventable.
In a report released by the World Health Organization it has been found that in most countries social health insurance systems are already under severe financial strain. The direct and indirect economic costs of chronic disease are growing despite cost containment efforts and put the long-term financial sustainability of systems at risk. Calculations show that obesity alone creates a major economic burden through loss of productivity and income, and its consequences consume up to 8 per cent of overall health care budgets. Patients with chronic conditions consume on average a substantially higher amount of health care services than patients with other conditions.
Increased health promotion helps respond to:
- The health challenges by improving and promoting the health of insured persons and their quality of life and by supporting overall improvements in population health
- The financial challenges through lower expenditures for curative care and, by creating positive externalities on other social security schemes, the labor market and the overall economic environment, through a strengthened contribution base;
- The social challenges through contributing to both intergenerational and redistributive solidarity by targeting the health expectancy of disadvantaged groups. In countries with low coverage, the potential spillover of health promotion activities within social health insurance systems for the insured population on the uninsured population can have an important impact on the health of the uninsured
Credit:ivythesis.typepad.com
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