Health financing


Fragility and conflict


Extreme poverty, premature mortality, and ill-health are increasingly concentrated in settings characterized by fragility and conflict (FCAS), often within otherwise stable countries. Fragility is an umbrella term, covering very different settings, fragile for different reasons. However, each is characterized by deficits in key government capacities, with clear implications for health financing policy.

The increasing fragility experienced globally presents a serious challenge for progress towards universal health coverage. To deliver on commitments under the Sustainable Development Goals and in the spirit of leaving no one behind, WHO offers a systematic approach to health financing policy in FCAS based on its health financing framework and guiding principles.

Financial protection

Financial protection is at the core of universal health coverage (UHC) and one of the final coverage goals. Health financing policy directly affects financial protection. Financial protection is achieved when direct payments made to obtain health services do not expose people to financial hardship and do not threaten living standards.

Out-of-pocket payments for health can cause households to incur catastrophic expenditures, which in turn can push them into poverty. Key to protecting people is to ensure prepayment and pooling of resources for health, rather than relying on people paying for health services out-of-pocket at the time of use.

Earmarking revenues for health

Earmarking revenues for the health sector is one way countries look to mobilize and stabilize the level of funds available. In principle, earmarking revenues means that all or a portion of funds will be dedicated to a particular sector or program, rather than subject to discretionary allocations from budgetary authorities. In spite of the vast country experience using earmarking, very little empirical evidence has been used in the policy debate.

WHO and the Joint Learning Network are now engaging with policymakers from health and finance authorities in a subset of countries to better understand the motivations and objectives for adopting earmarks, the process of implementation, and their impact on health sector budgets.

Performance-based financing

An Afghan doctor discusses with a woman postnatal care and benefits of exclusive breastfeeding.
N. Ansari

Performance-based financing (PBF) or pay-for-performance (P4P) is a form of incentive where health providers are, at least partially, funded on the basis of their performance to meet targets or undertake specific actions. It is defined as fee-for-service-conditional-on-quality.

In many low- and middle-income countries P4P programmes are implemented with the support of development partners and are referred to as Results-Based Financing (RBF). RBF is an umbrella term for an instrument that links rewards with performance. P4P/PBF/RBF should be viewed as a step in the process of moving systems towards more strategic purchasing.