About 90% of health funds’ income for providing NHI services comes from government (Figure 2.9), about half of which comes from an earmarked component of national insurance contributions (often referred to as the “health tax”), the rest from general taxation. Almost all of the government-to-fund transfer is through a capitation payment based on the age and sex profile of each fund’s client base and a “remoteness” variable (which was added in 2010 and is discussed further below). In contrast, transfers between the funds and the providers are based on health services provided (or approximations thereof). Hence, in principle, one of the key strengths of the system is that the health funds have incentives to ensure the efficient provision of services and to engage in preventive measures - a healthy client base means fewer costs through the reimbursement system.