Who Pays for Health St sion imply flows of funds from sources to providers through a variety of organizations, which may perform only one, or several of these tasks. Figure 5. 2 illustrates the structure of health system financing in four countries which differ greatly in the degree to which there is formal pooling of funds and purchasing rather than consumers paying directly to pro- Large pools are better than small ones because they can increase resource availability for health services. The larger the pool, the bigger the share of contributions that can be allo- cated exclusively to health services. A large pool can take advantage of economies of scale in administration and reduce the level of the contributions required to protect against certain needs, while still ensuring that there are sufficient funds to pay for services. Given that needs vary unpredictably, the estimation for an individual could be unaffordably large By reducing this uncertainty, the pool is able to reduce the amount set aside as a financial reserve to deal with variations in the health expenditure estimates for its members. It can then use the funds released for more and better services Fragmentation of the pool-in other words, the existence of too many small org . of all tions involved in revenue collection, pooling and purchasing -damages performance of all three tasks, particularly pooling. In fragmented systems, it is not the number of existing pools and purchasers that matters, but that many of them are too small. In Argentina, prior to the 1996 reforms, there were more than 300 pooling organizations(Obras Sociales Nacionales) for formal sector workers and their families, some with no more than 50 000 members. The administrative capacity and financial reserves required to ensure financial viability for the small ones, together with the low wages of their beneficiaries, guaranteed that their benefit packages were very limited. A similar problem occurs with community Table 5.2 Approaches to spreading risk and subsidizing the poor: country cases Country System Spreading risk Subsidizing the poor Multiple pools: multiple Intra-pool via non-risk-related Intra-pool and inter-pool: salary inter-pool via a related contribution plus explicit organizations, municipal health central risk equalization fund. subsidy paid to the systems and Ministry of Health Mandated minimum benefit poor to join social security; supply package for all members of all side subsidy via the Ministry of Health and municipal systems Netherlands Multiple pools: predominantly Intra-pool via non-risk-related private competing social insurance contribution and inter-pool via excluding the rich. organizations. central risk equalization fund. Republic of Korea Two main pools: national health Intra-pool via non-risk-related insurance and the Ministry of contribution. supply side subsidy via the Health Ministry of Health and national cit single benefit package for health insurance from Ministry of National health insurance health expenditures of any Public subsidy for insurance for the member poor and farmers Zambia Single predominant formal pool: Intra-pool, implicit single benefit Intra-pool via general taxation Ministry of Health/Central Board of package for all in the Ministry of Supply side subsidy via Health Health System and at state level. Ministry of Health Financed via general taxesWho Pays for Health Systems? 101 sion imply flows of funds from sources to providers through a variety of organizations, which may perform only one, or several of these tasks. Figure 5.2 illustrates the structure of health system financing in four countries which differ greatly in the degree to which there is formal pooling of funds and purchasing, rather than consumers paying directly to pro￾viders without any sharing of risks. Large pools are better than small ones because they can increase resource availability for health services. The larger the pool, the bigger the share of contributions that can be allo￾cated exclusively to health services. A large pool can take advantage of economies of scale in administration and reduce the level of the contributions required to protect against un￾certain needs, while still ensuring that there are sufficient funds to pay for services. Given that needs vary unpredictably, the estimation for an individual could be unaffordably large. By reducing this uncertainty, the pool is able to reduce the amount set aside as a financial reserve to deal with variations in the health expenditure estimates for its members. It can then use the funds released for more and better services. Fragmentation of the pool – in other words, the existence of too many small organiza￾tions involved in revenue collection, pooling and purchasing – damages performance of all three tasks, particularly pooling. In fragmented systems, it is not the number of existing pools and purchasers that matters, but that many of them are too small. In Argentina, prior to the 1996 reforms, there were more than 300 pooling organizations (Obras Sociales Nacionales) for formal sector workers and their families, some with no more than 50 000 members. The administrative capacity and financial reserves required to ensure financial viability for the small ones, together with the low wages of their beneficiaries, guaranteed that their benefit packages were very limited. A similar problem occurs with community Table 5.2 Approaches to spreading risk and subsidizing the poor: country cases Country Colombia Netherlands Republic of Korea Zambia System Multiple pools: multiple competing social security organizations, municipal health systems and Ministry of Health. Multiple pools: predominantly private competing social insurance organizations. Two main pools: national health insurance and the Ministry of Health. National health insurance, however, only covers 30% of total health expenditures of any member. Single predominant formal pool: Ministry of Health/Central Board of Health. Spreading risk Intra-pool via non-risk-related contribution and inter-pool via a central risk equalization fund. Mandated minimum benefit package for all members of all pools. Intra-pool via non-risk-related contribution and inter-pool via central risk equalization fund. Intra-pool via non-risk-related contribution. Explicit single benefit package for all members. Intra-pool, implicit single benefit package for all in the Ministry of Health System and at state level. Financed via general taxes. Subsidizing the poor Intra-pool and inter-pool: salary￾related contribution plus explicit subsidy paid to the insurer for the poor to join social security; supply side subsidy via the Ministry of Health and municipal systems. Via risk equalization fund, excluding the rich. Salary-related contribution plus supply side subsidy via the Ministry of Health and national health insurance from Ministry of Finance allocations. Public subsidy for insurance for the poor and farmers. Intra-pool via general taxation. Supply side subsidy via the Ministry of Health