Domestic Financing for Health: Key Issues

ECOSOC Regional Ministerial Meeting, Colombo: 16th March 20091 |

by

David B Evans, DirectorDepartment of Health Systems Financing

Health Systems and Services Cluster

by

David B Evans, DirectorDepartment of Health Systems Financing

Health Systems and Services Cluster

Domestic Financing for Health: Key IssuesDomestic Financing for Health: Key Issues

ECOSOC Regional Ministerial MeetingColombo, 16 March 2009


System Building Blocks or FunctionsSystem Building Blocks or Functions Goals / Outcomes of the Goals / Outcomes of the systemsystem

Fairness in Fairness in financialfinancial

contributioncontribution

Functions and Goals of Health System

I

N

P

U

T

S

CoveragCoveragee

EfficiencyEfficiency

QualityQualitySERVICE DELIVERYSERVICE DELIVERY

HEALTH WORKFORCEHEALTH WORKFORCE

INFORMATIONINFORMATION

MEDICAL PRODUCTS, VACCINES & TECHNOLOGIES

MEDICAL PRODUCTS, VACCINES & TECHNOLOGIES

LEADERSHIP/GOVERNANCELEADERSHIP/GOVERNANCE

FINANCING (COLLECTING, POOLING AND PURCHASING)

FINANCING (COLLECTING, POOLING AND PURCHASING)

ResponsivenessResponsiveness ((the way people the way people

are treated and are treated and the environmentthe environment))

HealthHealth


Three core health financing functions Three core health financing functions

Revenue collection Pooling Purchasing

Collect sufficient

funds efficiently

Share costs - not borne

only by people who

are ill

Buy or provide effective health

interventions

Equity and Transparency


Revenue CollectionRevenue Collection 13 Asian countries rely heavily on external funding for health. External funding the

focus of the next Panel. These countries are more at risk of reductions in the funds for health.

Parts of Asia still growing relatively strongly. Govt. Expenditure on health should continue to rise, at least proportional to GDP and General Government Expenditure.

Exceptions:

Countries relying on import and export taxes/duties for govt. revenue Where devaluation against currencies in which health imports denominated: e.g. medicines.

Even same levels of expenditure buy less.

Parts of Asia in recession. Concern that there will be pressure to cut government health spending, particularly where emergency IMF emergency support. Good reasons for resisting this. Spending on health important in an economic downturn, protecting the poor and vulnerable. Can also be an important part of a stimulus package – increasing aggregate Demand



Revenue Collection - HouseholdsRevenue Collection - Households Parts of Asia still growing relatively strongly: Household income on

aggregate should continue to grow.Some Exceptions: Possible reduction in remittances from abroad. Effective income might fall if devaluation causes prices of imports to

rise. Pockets of unemployed or vulnerable: e.g. those in the export sector Parts of Asia in recession: Effective household incomes fall.

Impact: less private health expenditures and shift to public sector. Important for public sector to be prepared.


1,300

150 100

0

200

400

600

800

1,000

1,200

1,400

Household categories

Po

pu

lati

on

in m

illio

ns

HH without accessto affordable andeffective health care

HH withcatastrophic hexp

HH impoverished

Pooling: Lack of access, financial catastrophe and impoverishment due to user-charges


PoolingPooling

Parts of Asia still growing relatively strongly: Important to continue the push towards prepayment and pooling of funds. Only then can universal coverage be achieved.

Parts of Asia in recession: Important to reinforce social protection mechanisms for the poor and vulnerable.

Crises sometimes offer opportunities for changes that might be politically difficult at other times: opportunity to set in place mechanisms that enable a more rapid movement to universal coverage when economic growth restarts.

Fundamental for the revitalization of Primary Health Care


PurchasingPurchasing Many sources of inefficiency in health e.g. Inappropriate mix of interventions or inputs purchased; Services available at inappropriate level of care; Waste – e.g. long length of stay; over use of medicines

Ways providers are paid are particularly important. Supply and demand side responses possible. Results-based financing (RBF)

receiving considerable attention these days. Demand side incentives such as cash transfers can also improve equity.

Important to recognize it is only one part of the requirements for a well functioning health financing system.

Crises again offer additional opportunities for change: e.g. move to generic medicines. Focus on equity


Conclusions 1: Domestic Health Financing Needs

Conclusions 1: Domestic Health Financing Needs

i. Raise additional funds where health needs are high and revenues insufficient

ii. Reduce reliance on out of pocket payments where they are high, by moving towards pre-payment and pooling

iii. Enhance social protection by ensuring the poor and other vulnerable groups have access to needed services, particularly during financial and economic downturns

iv. Improve efficiency and equity: appropriate mix of activities to fund, appropriate inputs in production of health services, provider payment methods and other incentives for efficient service provision and use, and financial, contractual and other relationships with the non-government sector

v. Promote transparency and accountability in health financing systems


Conclusions 2: Grasping the Opportunity

Conclusions 2: Grasping the Opportunity

vi. Recessions and crises offer the opportunity for bold thinking

vii. Health expenditure can be a valuable part of a stimulation package for countries in recession

viii.Measures to protect the poor and vulnerable are critical. The crisis offers the chance to move more quickly.


Thank you Thank you


Stages of Coverage

Reduce out-of-pocket payments

and increase prepayment

Absence of financial protection

Intermediate stages of coverage

Universal Coverage

* Out-of-pocket spending for health care

* Mixes of community Cooperative-and enterprise-based- -

health insurance, other private health insurance, SHI-type

coverage for specific groups and tax-based financing

* Tax-based financing

* Social health insurance

* Mix of tax - based financing and

various types of health insurance


Expected Economic Growth 2009IMF revised all estimates, for all regions, downwards:

Global Gross Domestic Product growth: 0.25%

Advanced Economies: -2.0% (first year on year negative growth since 1945)

Central and Eastern Europe: -0.4% Newly Industrialised Asia: -3.9%

Sub-Saharan Africa: +3.5% Developing Asia: +5.5%


Global Growth

GDP, US$, capita, growth

19992000200120022003200420052006compound

AFR0.9-4.70.921.020.215.711.311.712.37

AMR 5.40.6-0.24.37.07.87.07.35.62

EMR 14.6-4.26.96.516.818.915.313.812.12

EUR-5.90.69.321.116.27.07.316.412.87

SEAR5.2-1.35.514.912.812.314.320.213.00

WPR6.5-7.90.610.011.55.24.49.85.42

World1.6-1.92.911.111.37.16.711.48.02

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Domestic Financing for Health: Key Issues