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Chris Atim, PhDExecutive Director, African Health Economics and Policy Association (AfHEA)Presentation at Fifth Annual Meeting of the African Science Academy Development Initiative (ASADI)Improving Maternal, Newborn, and Child Health in Sub-Saharan Africa
La Palm Royal Beach Hotel, Accra November 9 - 11, 2009
Health Financing in Africa: Challenges and Opportunities for Expanding Access to Quality Health care
Explore current paradigm for health financing in Africa and whether it needs review
Examine financing targets and gaps Explore challenges facing African
governments to finance health Discuss complementary financing
mechanisms
2
Current paradigmCurrent paradigm Diagnosis: Principal
problem facing the region is a shortage of funds
Solutions: (1) Mobilize internal
and external resources (2) Focus on key
diseases and conditions (3) Set targets and
monitor progress
3
Proposed paradigmProposed paradigm Acute shortage of funds to meet
targets, but also problem of how funds spent
Governments should lead effort to explore innovative financing mechanisms
Focus also on how money is spent, not just how much
Collaborate with donor partners to ensure external resources help build the health system
Abuja: Government spending on health should be at least 15% of total government spending
East Asia & Pacific: 10.1% Latin America and the Caribbean: 12.5%
Commission on Macroeconomics & Health (CMH): Estimated $34 per capita for a basic package of health service
East Asia & Pacific: $62 (current US$) Latin America and the Caribbean: $272 (current US$)
Are targets meaningful? Relevant?
5
2.0
3.0
3.0
3.3
4.0
4.0
4.0
4.8
5.0
6.0
7.0
7.0
7.0
7.2
7.2
8.0
8.0
8.0
8.0
8.0
8.0
8.0
8.1
9.0
9.0
9.0
9.0
10.0
11.0
11.3
12.0
12.0
13.0
13.0
13.0
14.0
14.5
15.0
0.0 5.0 10.0 15.0 20.0
Ethiopia
Burundi
Chad
Egypt
DRC
Eq. Guinea
Nigeria
Sudan
Angola
Niger
CAR
Kenya
Burkina Faso
Djibouti
Cote d'Ivoire
Mauritius
Rwanda
Swaziland
Cape Verde
Mali
Mauritania
Togo
Tunisia
Madagascar
Malawi
Zambia
Senegal
South Africa
Mozambique
Libya
Uganda
Namibia
Tanzania
Gambia
Ghana
Sao Tome
Zimbabwe
Botswana
Percentage of national budgets allocated to health sector
Source: African Union. Progress Report on the Implementation of the Plans of Action of the Abuja Declarations for Malaria, HIV/AIDS and Tuberculosis; Revised Final Draft, 22 December 2005.
0 10 20 30 40 50 60
BurundiDRC
EthiopiaSierra LeoneMadagascar
LiberiaNiger
Guinea-Eritrea
TanzaniaMozambique
CARMauritania
Rw andaTogo
GambiaUgandaMalaw i
ChadKenyaGuineaNigeria
MaliBenin
Burkina FasoAngolaGhana
Zimbabw eCongo
ZambiaCôte d'Ivoire
LesothoCameroon
The CMH targetPer capita health spending, 2004
Per capita govt. expenditure on health Out-of-pocket expenditure on health Private pooled expenditure on health
6
Source: WHO SISNote: Countries spending >$90 total per capita on health were excluded to improve graph’s readability. These countries include Swaziland, Mauritius, Namibia, Gabon, South Africa, and Botswana.
The CMH Target
Few countries spend $34+
$-
$10
$20
$30
$40
$50
$60
$70
$80
Buru
ndi
DR
Congo
Eth
iopia
Eritr
ea
Lib
eria
Mala
wi
Sie
rra L
eone
Rw
anda
Madagascar
Nig
er
Uganda
Gam
bia
Mozam
biq
ue
Tanzania
CA
R
Togo
Mali
Guin
ea
Burk
ina F
aso
Ghana
Maurita
nia
Zam
bia
Kenya
Zim
babw
e
Nig
eria
Chad
Benin
Lesoth
o
Senegal
Cam
ero
on
Côte
d'Ivoire
Angola
Congo
<$250 $250-$499 $500-$999 $1,000+
country, sorted by GDP per capita
healt
h e
xp
en
dit
ure
(U
S$, 2004)
public spending private spending Abuja shortfall in public spending
CMH target $34
Source: World Bank, WDI 2007; author’s calculations.
As an indicator of African Governments’ commitment to contribute significantly to health sector
As a signal to partners that African Governments are matching their words with action
BUT … It is not a relevant indicator of what is needed to
provide basic health care services to the population
Depends on the denominator: 15% of what? Other factors such as demography also key Per capita spending is a better indicator of effort
8
What is needed to meet the MDGs? One estimate: more than 12% of GDP (at
regional level) would need to be spent on health to reach the targets by 2015
Current level: 4.7% of GDP goes to health Additional $20-25 billion per year needed
9Sources: Disease Control Priorities Project, 2007; and African Development Bank, 2002.
HIV/AIDS Disbursements* Relative to Size of Health Sector and GDP in 2005
Country % of public health spending
% of total government
spending
% of GDP
Ethiopia 43.8 3.3 1.1
Kenya 51.9 3.8 1.1
Mozambique 23.2 2.8 1.0
Rwanda 80.6 Not available 2.5
Tanzania 26.7 4.4 0.7
Uganda 150.2 12.7 3.1
Zambia 40.3 4.0 1.2
Notes: Disbursements include PEPFAR, GFATM, and World Bank MAP funding.
Source: Heller, Peter. “Pity the Finance Minister”: Issues in Managing a Substantial Scaling up of Aid Flows. IMF Working Paper WP/05/180. September 2005.
10%18% 25% 32%
19%
40% 30%
42% 25%
28%
50% 52%33%
42%53%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1998 2000 2002 2003 2006
Public Private DonorSource: Rwanda NHA 1998-2006
Health financing in Sub-Saharan AfricaRegional averages, 2004
Indicator Current level Target level
Health spending as a percent of GDP
4.7% >12% to reach MDGs by 2015, but not realistic
Government spending on health as a percent of total government budget
7% 15%
Per capita spending $21 $34
Out-of-pocket expenditures as a percent of private health expenditures
80% As low as possible
Out-of-pocket expenditures as a percent of total health expenditures
46% As low as possible
12Source: WHO SIS; World Bank World Development Indicators 2007 (2004 data).
Sustainable health systems approach needed Equity must be consciously pursued
Concerns with high levels of out-of-pocket spending
Efficiency of current spending important Priorities for allocation of spending How to spend the next $1 of additional funding
Effectiveness of health spending can be improved
13
Economic growth rates have improved, but not enough to meet health and poverty reduction targets Average annual % change in GDP in SSA countries in last
decade: 5-6% India: 9% (2006) China: 11% (2006)
Domestic revenue raising capacity is improving, but constrained Average tax revenue to GDP ratio: 18% (early 2000s) OECD: 40% and above
Fall in commodity prices due to reduced demand – oil, agric produce, minerals, tourism all affected Thereby affecting Govt revenues and fiscal space for health spending
World Bank estimates growth slowing to 2.4% in 2009; from 4.8% in 2008
Kenya, Tanzania, Zambia, DRC, Nigeria and Namibia reported higher drugs’ costs due to rising import prices /currency effects
Contraction in donor economies could threaten levels of external assistance Global Fund facing financing gap of $4BN through 2010 DRC, Lesotho, Liberia. Benin and ECSA countries report decreased
funding from some donors for certain activities including HIV/AIDS
15
The resource gap is a problem – but health systems constraints are an important bottleneck impeding achievement of health sector goals
Crisis in human resources for health To reach MDGs, SSA needs 1 million+ additional skilled
workers
Supply chain management, etc. Government leadership and effectiveness are
often weak Eg As seen from various public expenditure tracking
surveys (PETS)
Revenue raising and risk pooling through insurance Community-based health insurance National/social health insurance schemes
Performance-based financing Innovative international financing
mechanisms
17
Community-based health insurance Set up by communities, workers, providers, NGOs, etc Pooling of community funds to pay for care of needy Rapid growth in West and Central Africa (WCA) Results from CBHI surveys:
Sizes are small – <1000 to 5000 members Urban v. rural: Tend to have a rural bias: 41% covered rural areas
exclusively, compared to 34% covering urban populations exclusively.
Services covered: drugs (about 78% of mutuelles offered this benefit) maternity care (around 58% of mutuelles covered normal
delivery and 55% covered cesarean operations). outpatient and inpatient services with at least 55% of
mutuelles offering each of these services.
18
National health insurance schemes (NHIS) Set up by Govts to extend health care access to all the
population Learnt from failed social insurance (SHI) experiences of initial
post-independence period Focus particularly or at least equally on enrolling rural and
informal sector workers previously excluded from SHI schemes. Decentralized and community-based, not workplace-based.
Countries Ghana, Rwanda and Tanzania (NHIS built on previously-existing
CBHI pilot schemes). Nigeria, Gabon and Kenya (more classic or traditional SHI in
their initial reliance on formal sector population groups
19
National Health Insurance Fund (NHIF) established in 2003
Financed by 2.5% National Health Insurance VAT levy and diversion of 2.5% of the social security contributions of formal sector workers to the NHIF (Ghana has now achieved Abuja target)
NHIF is used to subsidize membership of formal sector employees, pensioners, children under the age of 18, pregnant women, indigents and those over 70.
Informal sector adults are the only people who pay cash to join the schemes; all others are ‘exempted’ from paying when they join.
Rapid growth in membership, totaling about 12.5 million people or about 55% of the total population by end 2008. Driven mainly by the subsidized groups: children under 18 make up over
50% of members; exempted make up over 70% of members But indigents make up only about 2.4% of members. An equity problem?
20
Community-based health insurance Pros: mobilize resources, provide financial protection,
quality gains, pro-poor and pro-rural Challenges: small risk pools, financial sustainability
concerns, low population coverage National health insurance schemes
Pros: can cover large population groups, focus on enrolling rural and informal sector, can build on community-based schemes, allows earmarked taxes (Abuja target), rapid growth possible (Rwanda, Ghana)
Challenges: difficult to extend coverage to really poor, long term financial sustainability an issue
21
Mechanisms that tie funding to measurable results
Link demand- and supply-side incentives with households, providers, and institutions
Examples: Conditional cash transfers (Mexico, educ
pilots in 15 African countries) Performance-based contracting for HIV
services (Rwanda) Immunization grants (GAVI) 22
Pros increase technical efficiency of service provision stimulate demand for priority services non-health benefits (i.e. incentives tied to school
attendance) Quality improvements
Challenges requires sustained efforts from countries and
donors taking to scale and integration with health
system needs significant resources and skills
23
Global funds and health partnerships Examples: GAVI, Global Fund, IHP+, Global
Business Plan Bilateral initiatives
Examples: PEPFAR, PMI Mechanisms to address market failures
Examples: UNITAID, Advance Market Commitments, IFFIm, AMFm
Debt and performance-based aid modalities Examples: IDA buy-downs, debt conversion
24
Pros Designed to address challenges with international
health aid architecture Fresh approach to problem solving Generating new resources for health
Challenges Proliferation of mechanisms challenges
harmonization and alignment efforts (Paris Declaration)
Increased burden on countries Funding priorities may not align with country
priorities
25
Need to update paradigm for health financing in the region
Targets help galvanize attention but are not panacea and need to be tailored to countries
Track per capita spending as well as 15% target
More money is needed but money alone is not sufficient
Attention to funding priorities, health systems, equity and efficiency also needed
Complementary or additional financing mechanisms should be considered
26