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Washington, D.C., World Bank, Population, Health and Nutrition Dept., 1986 Dec 31. 124 p.In the current environment of general budget stringency in developing countries, it is unrealistic to push for more public spending for health services. The answer to this health crisis is to relieve government of much of the responsibility for financing those kinds of health services for which the benefits to society as a whole (as opposed to direct benefits to the users of the service) are low, freeing public resources to finance those services for which benefits are high. The intent is to relieve government of the burden of spending on health care for the rich, freeing public resources for more spending for the poor. Individuals with sufficient income should pay for their curative care. The financing and provision of these "private" health services should be shifted to a combination of the nongovernment sector and a public sector reorganized to be more financially self-sufficient. A shift such as this would increase the public resources available for those types of health services which are "public goods" and currently are underfunded "public" health programs, such as immunization, vector control, some prenatal and maternal care, sanitary waste disposal, and health education. Also such a shift would increase the public resources available for simple curative care and referral for the poor who now only have limited access to low quality services of this nature. Government efforts to cover the full costs of health care for everyone from general public revenues have contributed to 3 sets of problems in the health systems of many countries: an allocation problem -- insufficient spending on cost-effective health activities; an internal efficiency problem -- inefficient public programs; and an equity problem -- inequitable distribution of benefits from health services. 4 policies for health financing are proposed to raise revenues for important health programs, increase the efficiency of public health services, and make the system better serve the poor. These are: charging users of public health facilities; providing insurance or other risk coverage; strengthening nongovernmental health activities; and decentralizing government health services. A table summarizes the effects of each of the 4 options for reform in alleviating health sector problems.