**2. Health financing and insurance system**

The WHO created a framework for health financing that emphasizes the need for financing strategies to be assimilated into national health policies and service delivery plans [12]. Healthcare financing in LMICs and people's access to vital quality healthcare are dependent on OOPs, despite ongoing worldwide consensus over the need to enhance national health financing systems to build sustainable and all-encompassing policies. These obstacles to access are a major cause of preventable mortality [13].

To preserve and improve human wellbeing, health systems highly depend on health financing. Healthcare financing is the function of health system involved

#### *Toward Universal Health Coverage: The Role of Health Insurance System DOI: http://dx.doi.org/10.5772/intechopen.106431*

with the mobilization, accumulation, and funding to meet the health demands of the people, collectively and individually, in the health system [9]. Health insurance remains an imperative policy strategy for improving health outcomes at this crucial time, when many countries are pursuing the third sustainable development goal (SDG) of safeguarding healthy lives and promoting well-being for all at all ages [7, 14]. As a result, health insurance ensures that no one has to choose between getting medical care and going without for the sake of a lack of money [15, 16]. The World Bank has stated that several nations' sustainable development goals (SDGs) consider health insurance as a crucial component [17].

To guarantee that everyone has access to quality healthcare; the goal of health finance is to make funds accessible and to set the appropriate economic incentives for providers [11]. The health financing system frequently focuses on three interconnected essential features. The first is revenue collection: mobilizing sufficient resources from internal and external sources (such as prepayment schemes, government taxes, OOP payments, and donor funds). The second feature is risk pooling: the concentration and equitable distribution of prepaid economic resources to provide FRP across all beneficiaries, and pooled funds that can be derived from tax and donor funds. The third is fund allocation: allocating funding to health service providers will ensure that the public has access to adequate and effective services.

General tax income, social insurance, voluntary insurance, charity donations, and individual out-of-pocket costs are the five ways that health expenses are financed. To really achieve the intended advantages, countries' health benefit packages (HBPs) must be structured around the three essential components of the health funding system. Coordination between various funding sources is essential for attaining UHC given nations' health finance structures are typically combinations of public (tax-based, health insurance funds, and outside help) and private mechanisms (OOP) [7, 18].

The payment for healthcare at the time-of-service use is reduced and healthcare financing provides universal coverage of publicly supported essential health services. Additionally, by providing cross-subsidies from the wealthy to the poor and from the well-off to the ill, universal health funding would improve equity. Health financing and insurance reforms are being pushed in the favor of prepaid sources using general taxes, health insurance, or a combination of measures. However, development varies among nations, with public financing predominating in high-income nations and private expenditure being prevalent in LMICs [19].

Most nations are dedicated to building a strong health insurance system to achieve universal coverage. However, there is ongoing discussion over the relative merits of various types of health insurance (**Table 1**) [20]. The United Kingdom, for example, has developed a tax-based national health system that covers every resident [21].

Social health insurance on the other hand relies on employees contributing a percentage of their salaries to a health insurance fund that is used to refund affiliates' health expenditures [20–22]. Social insurance programs are mandatory insurance systems that are contributed to by employers and employees. Germany has created an extensive system of health, pension, long-term care, and insurance schemes for its inhabitants, providing a minimal degree of financial security that is frequently used as a benchmark for social insurance systems and advances the aspects of preventive care, primary prevention, resource, and financing decisions [23].

Private health insurance mostly appeals to the wealthy portions of the population and provides health plans that cover a certain list of medical issues in exchange for a renewable premium [20, 24].


**Table 1.** *Major types of health insurance and health financing mechanism.*

Organizations and/or employees may choose to obtain insurance from private companies voluntarily to reduce the possibility of monetary losses brought on by disease or the price of healthcare. Large portions of society in several nations have their health needs covered through voluntary insurance programs rather than social insurance programs. For instance, around two-thirds of the active population in the United States is covered by voluntary insurance.

Community-based health schemes are widespread in low- and middle-income nations and are frequently intended to help the underprivileged. In many nations, these programs are also utilized to raise additional funds to maintain disjointed health systems or diverse funding systems [20, 25].

Out-of-pocket funding for public health projects might not produce the best results. First, by eliminating the very obstacles to engagement that out-of-pocket costs offer, numerous healthcare businesses aim to boost disease management and promote health initiatives. Second, paying for healthcare out of pocket reveals what people are prepared to pay for a service and the amount they consume at that cost.
