COMPARE AND CONTRAST THE RELATIVE HEALTH AND ECONOMIC BENEFITS OF SOCIAL HEALTH INSURANCE AND TAX BASED SYSTEMS OF HEALTH CARE FUNDING

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INTRODUCTION

RELATIVE HEALTH AND ECONOMIC BENEFITS: The emerging world is currently in the course of a challenging debate about the benefits of social health insurance and tax-based finance systems for healthcare funding. Many philosophers proclaim that SHI is minimizing the employment rate by downcasting the firms to appoint more employees. Whereas the supporters of SHI proclaim that SHI systems provide an alternative approach to increase revenues in the health sector and can consequently provide better health care as compared to tax-financed healthcare systems. In the current era, SHI is somewhat being implemented in most parts of the world. Both of these systems have certain pros and cons and hallmarks. However, these both systems are embracing ideas from one another on daily basis.

The major goal of this essay is to compare and contrast the health and economic benefits of both these systems that are social health insurance (SHI) and tax-financed systems and to give an insight to the statement “which one is more beneficial for health care funding?”As many important and compelling debates, this essay aims to debate on the relative health and economic benefits of SHI and tax-financed systems and is likely to provide a general idea for the question “SHI or Tax financed system, which one is more preferable for health care funding?”.

The major difference between SHI and a tax-financed system is that the revenue for SHI system is financed from earnings of formal sector workers whereas the tax-financed systems finance their revenues from taxes imposed by the government. Moreover, both of these systems have different delivering presentations: conventionally social health insurance deals with providers whereas the tax based finance system deals with managing faculties, due to this very reason the payment system in social health insurance is much more powerful and controlled. Moreover, tax-based financed system have gatekeeper system which is missing in the social health insurance. These above-mentioned differences, however, in some manner affect employment rate, health expenses and development in the health sector (Banks, Marmot, Oldfield and Smith, 2006)

I particularly intend to answer this stimulating debate by providing examples of the countries that have either implemented SHI or taxes financed system or are in the midst of implementing these two systems.

According to Wagstaff (2009), before proceeding to answer the question of this essay, it is important to know which health care funding system has been embraced by different countries of the world. As far as health financing system is considered the current 29 countries that are the part of the organization for economic co-operation and development (OECD) are divided into four classes.

Class 1

This class includes countries that have adopted SHI system for their health care funding. These countries include Austria, Belgium, France, Germany, Japan, Korea, Luxembourg, Mexico, the Netherlands, Switzerland and Turkey.

Class 2

This class includes countries that have implemented the tax-financed system. These include Australia, Canada, Finland, Ireland, New Zealand and the United Kingdom.

Class 3

class 3 includes countries that earlier implemented SHI systems and then moved to the tax-financed system in 1960’s. This class includes Denmark, Greece, Iceland, Italy, Norway, Portugal, Spain and Sweden.

Class 4

This class includes countries that earlier has SHI system but after the invasion of communists, they followed the tax-financed system and in 1990’s…