With recent world health reports focussing on health systems, there have been renewed calls for universal health-care coverage globally. Ensuring universal coverage requires a well-financed health system. However, the evidence guiding health system financing policy is equivocal. Health financing mechanisms need to be appropriate for the country with an emphasis on equity, income and risk subsidization, and a trend towards reducing out-of-pocket payments. Innovative financing mechanisms have great potential to meet the funding demand without generating unsustainable pressure on public resources. As such, innovative financing has the potential to fill the funding gap critical to the transition to more equitable models of health-care financing in many low- and middle-income countries.