Glossary Terms

A

A
Access to health services

The ability to utilize a full range of preventive and curative services without facing prohibitive geographic, financial, cultural, or other barriers. May also by used as a measure of the proportion of a population that is able to reach appropriate health services without facing these barriers.

A
Actuarial analysis

The application of mathematical and statistical methods to assess risk in insurance, finance, and other industries and professions. Health insurance providers use actuarial analyses that predict use of health services based on multiple factors to set prices of health insurance products.

A
Advserse selection

Strategic behavior by the more informed party in a contract against the interest of the less informed party. In the health insurance field, this manifests itself through healthy people choosing managed care and less healthy people choosing more generous plans.

A
Allocative efficiency

Allocative efficiency refers to the capacity of government to distribute resources on the basis of the effectiveness of public programs in meeting its strategic objectives. It entails the capacity to shift resources from old priorities to new ones and from less effective to more effective programs to maximize health outcomes for a given budget or minimize costs for a given outcome.

B

B
Basic medical coverage

A health insurance policy that covers life-saving services, typically including expenses such as a hospital room, hospital services, surgical care, anesthetics, medical equipment and, sometimes, outpatient care.

B
Benefit package

The set of services and other advantages (monetary or in kind) to which a person is entitled to by virtue of meeting particular criteria (e.g., eligibility, formal enrollment).

C

C
Capitation

A mode of payment to providers where a tax or fee is levied per head, or a grant or budget is provided per head of a given population who are entitled to a certain service. This translates into service providers being paid for the number of individuals for whom they are responsible to attend.

C
Cash transfer

Direct financial payments to eligible individuals or households. Cash transfers can be conditional, meaning the payment is dependent on recipients' or family members' compliance with predefined criteria or actions, often including school enrollment, vaccinations, or doctor's visits.

C
Catastrophic expenditure

When out-of-pocket payments for health services consume such a large portion of a household's available income that the household may be pushed into poverty as a result.

C
Community-based health insurance

A prepayment mechanism with pooling of health risks and of funds taking place at the level of the community or a group of people who share common characteristics (e.g, geographical or occupational).

C
Compulsory health insurance

Health insurance under an obligatory public scheme, enforced by law. Payment for such insurance usually takes the form of a tax on income but may also be a fixed fee or premium. Social health insurance is the most common type of compulsory health insurance.

C
Concessional loan

Credit extended on terms that are more favorable to the borrower than are available on loan markets, characterized by lower interest rates, long grace periods, or a combination of these, and usually provided by the International Monetary Fund (IMF) or World Bank. However these loans are contingent upon the recipient counry meeting specific economic targets, enacting desired policies, or using the funds for specific purposes.

C
Contracting

Contractual arrangements between the government and private providers (contracting out) or with government providers (internal contracting) where the government pays the contracted entity for the delivery of health services to a specified group.

C
Contributions

A tax payment levied for compulsory health insurance, often as part of a social security scheme; or a payment made in a voluntary scheme, the size of which is determined by regulations agreed to by the parties involved. The payment of the contributions provides entitlements to specified services for the contributors.

C
Copayment

The amount (usually stated as a fixed amount in local currency or percentage) that an insured person must pay out of pocket for a medical service (e.g., doctor's office visit) or prescription drug.

C
Cost effectiveness

The degree to which something is effective or productive in relation to its cost. Cost effectiveness analysis is used to inform resource allocation decisions. The incremental cost-effectiveness ratio (ICER) is calculated based on the difference in cost between two possible interventions, divided by the difference in their effect, and is used in cost-effectiveness analyses.

C
Cross-subsidization

The practice of charging higher prices to one group of consumers to subsidize lower prices for another group.

C
Crowding in

An economic principle in which investment increases as debt-financed government spending increases.

D

D
Debt relief

The partial or total remission of debts, especially those owed by developing countries to external creditors.

D
Deductable

A fixed dollar amount during the benefit period – usually a year – that an insured person pays out-of-pocket before the insurer starts to make payments for covered medical services.

D
Demand

The want, need, or desire for a product combined with the evident willingness and ability to pay.

D
Demand-side financing

A subsidy, entitlement, or transfer provided to individuals and households who seek health services to incentivie health seeking behvaiour.

D
Diagnosis-related group

A classification of hospital case types into groups that are clinically similar and are expected to have similar hospital resource use. The groupings are based on diagnoses but may also be based on procedures, age, sex, and the presence of complications or comorbidities. Diagnosis-related group is also known as case-based group or case-mix group.

D
Disposable income

Income remaining after deduction of taxes and other mandatory charges, available to be spent or saved as one wishes.

D
Domestic financing

Funds that originate from the national or subnational government, civil society, or private-sector organizations based in the country.

D
Domestic resource mobilization

The process through which countries raise and spend their own funds to provide for their people.

E

E
Earmarked tax

Earmarking involves separating all or a portion of total revenue – or revenue from a tax or group of taxes – and setting it aside for a designated purpose.

E
Efficiency

In economics, efficiency is a concept concerned with the relationship between inputs and outputs in the production of goods and services. An efficient state is when every resource is allocated to service each individual or entity in the best way while minimizing waste.

E
Exclusions

Risks that are not covered by an insurance policy.

E
External financing

Funds provided by sources based outside of the country, including foreign governments and international civil society or private sector organizations.

F

F
Fee-for-service

A mode of payment to providers based on the number and types of services provided and the predetermined price per service. Fee-for-service may encourage provision of higher volumes of services or more complex and costly services than are medically necessary.

F
Financial protection

Financial protection refers to the ability of patients or users of health services to obtain health services without being exposed to financial hardship or negatively impacting their standard of living. Financial protection is a core tenet of universal health coverage.

F
Fiscal decentralization

Shifting some responsibilities for revenue generation and/or execution of expenditures to lower levels of government.

F
Fiscal space

Funds available to government for public purposes, which can be mobilized without endangering the macroeconomic standing of the country. Governments can increase fiscal space for specific sectors or programs (such as health) by increasing revenue generation (from taxes or other sources), increasing allocation to the desired sector as a share of the overall budget, receiving external financing in the form of grants or loans (either for a specific sector or in general), and cost savings by increasing expenditure efficiency.

F
Fixed costs

Operating costs that are unaffected by variations in service provision.

F
Formal economy

The sector of the economy that generates income on which tax must be paid. Formal economy activities are included in calculations of a country's gross national product (GNP) and gross domestic product (GDP).

F
Fragmentation

Fragmentation refers to the existence of a large number of separate funding mechanisms (e.g., many small insurance schemes) and a wide range of healthcare providers paid from different funding pools. Different socioeconomic groups are often covered by different funding pools and served by different providers.

G

G
Global Financing Facility

A multi-stakeholder partnership and financing platform that supports country-led efforts to improve maternal, child, and adolescent health.

G
Grant

Non-repayable funds or products disbursed or gifted by one party (grantmakers), often a government corporation, foundation or trust, to a recipient, which may be another government, nonprofit entity, educational institution, business, or individual.

H

H
Health insurance

A mechanism by which money is raised to pay for health services by financial contributions to a fund; the fund then purchases health services from providers for the benefit of those for whom contributions are made or who are otherwise covered by the scheme.

I

I
Informal economy

Part of an economy that is neither taxed nor monitored by any form of government. Large segments of the population in developing countries work in the informal sector.

I
Innovative financing

A range of nontraditional mechanisms used to raise additional funds for development aid through "innovative" projects such as micro-contributions, taxes, public-private partnerships, and market-based financial transactions.

I
Investment case

An investment case argues why increased funding is needed for health or a specific area within health (e.g., family planning, HIV, maternal health) based on evidence such as cost effectiveness or stakeholder priorities.

L

L
Line-item budgeting

A budget in which the individual financial statement items are grouped by cost centers or departments. It shows the comparison between the financial data for the past accounting or budgeting periods and estimated figures for the current or a future period.

M

M
Managed care

A system of healthcare in which patients agree to visit only certain doctors and hospitals, and in which the cost of treatment is monitored by a third party.

M
Microinsurance

Microinsurance is a mechanism to protect low-income people against risk, such as accident, illness, or natural disasters, in exchange for insurance premium payments tailored to their needs, income, and level of risk.

M
Moral hazard

Lack of incentive to guard against risk when one is protected from its consequences, e.g., by insurance.

N

N
Needs-based financing

The allocation of financial or budgetary resources based on a formula reflecting population health needs, often incorporating the proxies of size, age, and sex of the population and degree of poverty. Potentially, needs-based financing can address the dimensions of availability of services, affordability (by reducing costs of services), and geographic accessibility (by reducing the distance to providers).

N
Negative benefits package

An insurance scheme or plan defined by the explicit exclusion of certain services and the implication that services not listed as excluded are covered.

O

O
Out of pocket

Direct payments made by individuals to healthcare providers at the time of service use. This excludes any prepayment by individuals for health services, such as through health insurance premiums.

P

P
Passive purchasing

Passive purchasing implies following a predetermined budget or simply paying bills when presented.

P
Payroll tax/deduction

Taxes paid on the wages and salaries of employees. These taxes are used to finance social insurance programs, such as Social Security and Medicare in the United States.

P
Peformance-based financing

Performance-based financing (or pay-for-performance (P4P)) is a type of financing mechanism wherein payments are made or financial incentives are provided based on the achievement of predetermined performance targets. These targets can be by input or output. Results-based financing is a form of output-focused perfomance-based financing.

P
Positive benefits package

A set of services covered by an insurance scheme or plan defined by their explicit inclusion, usually in a published list.

P
Premium

The fee charged to pay for insurance coverage, usually paid monthly or annually.

P
Private health insurance

Insurance that is provided by the private health insurance industry, rather than the government.

P
Progessive tax

A tax for which the tax rate increases, as a percentage of income, as income/taxable amounts increase.

P
Program-based budgeting

Budgeting based on the financial resources required to carry out program activities toward achievement of specific outcomes.

P
Providing for Health (P4H)

A global health financing network that became the main coordination platform for investors in universal health coverage.

P
Public financial management

Public financial management is concerned with aspects of resource mobilization and expenditure management in the public sector.

P
Purchaser

An organization that buys health services, using pooled funds, for certain groups or for the entire population.

R

R
Regressive tax

A tax for which the tax rate decreases as a percentage of income as income/taxable amounts increase.

R
Results-based financing

A form of incentive financing where financing is linked to predetermined results, with payment made only upon verification that the agreed-upon results have actually been delivered/achieved. Results-based financing can seek to influence the behavior of health providers, patients, and other actors in the health sector.

R
Risk pooling

Pooling is the health system function whereby collected health revenues are transferred to purchasing organizations. Pooling ensures that the risk related to financing health interventions is borne by all members of the pool and not by each contributor individually. Its main purpose is to share the financial risk associated with health interventions for which there is uncertain need.

S

S
Social health insurance

A government-operated insurance scheme typically characterized by the mandatory payment of a payroll tax by employees and/or employers. Funds are then used to provide health services or insurance coverage for contributors and their dependents. In more mature schemes, the government sometimes subsidizes the the enrollment of informal sector works and the poor.

S
Social security

The provision of social protection against a number of risks, such as incapacity to work resulting from disease or disability, unemployment, old age, or family maintenance.

S
Strategic purchasing

Active, evidence-based engagement in defining the service mix and volume, and selecting the provider mix to maximize social objectives when purchasing health services.

S
Subsidy

A payment made by the government with the aim of reducing the market price of a particular product for specific populations (e.g., the poor) and/or maintaining the income of the producer.

S
Supply

The amount of a product made available for sale at a particular price.

S
Supply-side financing

Financial payments and incentives to those who supply healthcare services with the intent of improving access and quality of services for the populations targeted.

T

T
Technical efficiency

Technical efficiency refers to the physical relationship between resources (capital and labor) and health outcomes. A technically efficient position is achieved when the maximum possible improvement in outcomes is obtained from a set of resource inputs. An intervention is technically inefficient if the same (or greater) outcome could be produced with less of one type of input.

T
Third-party payers

An entity that pays for the cost of healthcare service provision independent from either the patient or the provider (e.g., a health insurance company)

T
Tiered copayments

Copayments differ for different categories of services or prescription drugs. For example, there could be a higher copayment for "nonpreferred" drugs than for generic brands.

T
Total market approach

An evidence-based process for identifying market players; understanding how they can contribute to improved access to information, products, and services; and implementing market interventions to enable the total market to grow

U

U
Unit cost

The cost per patient or service within a defined population and time period. Unit cost estimates can be used to calculate total resource requirements or in estimating intervention cost effectiveness.

U
Universal health coverage (UHC)

The concept that all people and communities can use the promotive, preventive, curative, rehabilitative, and palliative health services that they need and the services are of sufficient quality to be effective, while also ensuring that the use of these services does not expose users to financial hardship.

U
User fee

 

A form of payment at the point of service. They are paid out of pocket by patients and imply the absence of risk sharing. They are typically paid on a per visit or per service basis.

V

V
Variable cost

A cost that varies with the volume of output (e.g., number of services provided or number of patients seen)

V
VAT (value-added tax)

A type of consumption tax that placed on a product whenever value is added at a stage of production and at final sale. The amount of VAT that the user pays is the cost of the product, less any of the costs of materials used in the product that have already been taxed. Portions of VAT can be earmarked for health.

V
Voucher

A credit of a certain monetary value that can be used only for a specified purpose, such as visiting a health facility for antenatal care.

W

W
Willingness to pay

The maximum amount an individual is willing to pay for a product or service.