3.2 Sources of revenue and financial flows The government sector is predominantly financed through general revenue taxation, while the private sector is financed through OOP spending, private insurance, direct employer payments, employer insurance and contributions from non-profit organizations. External health financing is small in Sri Lanka in general, though there were large inflows after the tsunami in December 2004. Donor financing is largely channelled through the government sector, though in specific instances it is paid out to nongovernmental organizations (NGOs) working in specific areas related to health. Foreign governments and international NGOs contributed a much smaller proportion of revenue in terms of transfers compared to national government contributions. Table 3.4 gives the various sources of revenue as a percentage of CHE. Table 3.4 Source of revenue as a percentage of CHE (2016) Source of revenue
US$ (million)
% of CHE
OOPE
1598.5
50.1
Government domestic revenue
1361.5
42.7
Employer contribution to the CHE (in the form of health insurance premium and other methods)
116.3
3.6
Private health insurance
65.2
2.0
Rest of the world financing schemes
27.7
0.9
Social health insurance
13.8
0.4
Nongovernmental organizations Total CHE
6.3
0.2
3189.3
100.0
Source: Ministry of Health, Nutrition and Indigenous Medicine, 2018d
Figure 3.6 is a schematic representation of the flow of funds in the health system, illustrating that there are two sets of arrangements in the Sri Lankan context – administration and financial linkages. There are three main funding sources: government, individual citizens and donors. General taxes to the government are disbursed to state health institutions (providers) through a chain of financing agents. The treasury collects tax revenue and disburses the funds to hospitals that are directly managed under the Ministry of Health, i.e. teaching, general and specialized hospitals that provide specialized care as well as PHC services,9 and vertical preventive/disease control units.
9
In Sri Lanka, institutions are classified as tertiary-, secondary- and primary-level institutions and, in all of these, outpatient services are provided, which fulfils primary care needs.
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