Interlinkages between Healthcare Financing and Allocation in German Healthcare System

Seminar paper from the year 2019 in the subject Economy - Health Economics, grade: 1.7, University College Cork (School of Business), course: Health Economic Practice, language: English, abstract: Finance and Resource Allocation is one of the most important components of a healthcare system. They have direct implication on the quantity and quality of care. Therefore, how the funds are collected, how the resources are pooled and how they are allocated in health and social care is a matter of immense importance. Based on its importance on peoples life, this sector is also heavily regulated and is debated about how to make it efficient and how to generate the best outcome by being cost-effective. Resource allocation in Healthcare is an evolving process by itself because healthcare goods experience price rises, such as the medical technologies like drugs, devices, processes etc coupled with other socio-economic problems like Ageing, Climate Change etc which have direct or indirect impact on health and healthcare. Decision makers face challenge on how to spend the limited resources in the most efficient ways. Furthermore, how a healthcare system is financed will impact the decision of patients and providers by the incentives it creates. For example, in the Beveridge Model of healthcare system, present in the United Kingdom where there is no requirement to pay fee for GP visit, it can lead to over-utilisation of services whereas in the Irish system where a fee is to be paid, it can lead to under-utilisation at the first moment to save cost. From the providers side, it can influence gatekeeping by the GPs. Hence, healthcare financing, resource allocation and health outcomes are interlinked.