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Principles in Health Economics and Policy$
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Jan Abel Olsen

Print publication date: 2017

Print ISBN-13: 9780198794837

Published to Oxford Scholarship Online: September 2017

DOI: 10.1093/oso/9780198794837.001.0001

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Funding sources: an overview

Funding sources: an overview

(p.119) Chapter 9 Funding sources: an overview
Principles in Health Economics and Policy

Jan Abel Olsen

Oxford University Press

This chapter provides an overview of alternative funding sources. It starts with the ‘three-party model’ to illustrate the money flows between households, providers, and purchasers, that is, government and private insurance as the third-party payers. The chapter distinguishes four funding sources which in sum will represent the total budget for possible healthcare expenditures: (1) patient payments (commonly referred to as ‘out-of-pocket’ payments); (2) private health insurance; (3) tax funding, including social insurance systems with payroll contributions; and (4) donations. These four sources of revenue can be explained by people’s preferences for their own health insurance as well as their willingness to cross-subsidize fellow citizens’ use of healthcare. International comparisons show wide disparities in the proportions of funding sources, primarily reflecting how wealthy a country is.

Keywords:   three-party model, patient payment, tax funding, health insurance, development assistance for health

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