Nouria BrikciSenior Policy and Advocacy Adviser

Save the Children UK

Domestic health financing in sub-Saharan Africa

Structure of the daySome theory and sharing of experiences

(session 1)Some feasibility discussion of financing

reforms in SSA (session 2)Case study of Tanzania (session 3)Group work: role play (session 4)

Structure of presentation

1. Some background definitions2. Why health financing matters in general

and for health governance particularly3. Outline of each financing mechanisms -

pros and cons4. Conclusion

Objectives

Participants get broad understanding of health financing theory and how relates to health governance

Participants are able to understand and analyse health financing debates in their countries/ work

Participants share experiences/ problems from their own contexts

1. DefinitionsUniversal coverage: achieving universal coverage means:

Providing all people with access to needed services of sufficient quality to be effective

Ensure that use of those services does not expose user to financial hardship

Health financing• Revenue collection: way money is raised to pay health

systems costs• Pooling of resources: accumulation and management of

financial resources to ensure that financial risk is borne by all pool members

• Purchasing of services: process of paying for health services

Principle key to governance: Equity horizontal equity, i.e. equal treatment of equals (thus equal

expenditure, utilisation or access for equal need, equal health outcomes)

vertical equity, i.e. unequals being treated differently according to the same criteria (thus unequal treatment for unequal need or unequal payment for those with unequal incomes).

2. Why health financing matters

An essential WHO health system’s pillarRelevance to health governance :

Equity and well being central - universal coverageTool for participation and reaching best interest of

populationLink with transparency/ accountabilityShould allow responsiveness

3. Various health financing mechanisms

Private Public

User charges Social Health Insurance (SHI)

Community Based Health Insurance (CBHI)

Taxation (direct, indirect, general, earmarked)

Private Health Insurance (PHI)

Medical Savings Accounts (MSAs)

Informal payments

Mixed methods

User fees/ chargesPros

– Raise revenue for health– Reduce frivolous demand– Cost containment– Exemption mechanisms can protect vulnerable

Cons– Limited revenue raised– Constrains necessary demand - Frivolous demand

not an issue in poor contexts– Very regressive – push people into poverty or debt– Exemption mechanisms do not work– Discourage early care seeking

Consensus: need to remove fees – how and what to replace them with?

The Sudden and Sustained Impact of Abolishing User Fees Total Monthly Outpatient Attendances in Kisoro District 1998-2007

0

10000

20000

30000

40000

50000

60000

Jan98

Jan99

Jan00

Jan01

Jan02

Jan03

Jan04

Jan05

Jan06

Jan07

Outpatient attendances 12 month moving average

User fees abolished

200% increase

Utilisation Rate1.6 visits perperson per year

Source: MoH SL, six month review, unpublished report

User fees removal in SSA

Sénégal 2006 - Free deliveries

All services free - Libéria february 2007

Burundi Aug 2006 – free for under fives and deliveries

Zambie april 2006 – free in rural areas

Kenya October 2007 – free deliveries

Uganda March 2001 : all services free

Free care for C Sections and under fives – Sudan feb 2008

Sierra Leone April 2010- Free care for pregnant and lactating women and children under five

Tanzanie 1993 – free services for under fives and maternity

Malawi – remained free

South Africa – free primary care

Ghana May 2008 - free for under fives and pregnant women

Lesotho January 2008 – free primary care

Zimbabwe Aug 2010 – free for pregnant women

Madagascar 2008 – free deliveries

Niger 2006 – free services for under fives and pregnant women

How to remove user fees1. Initial situational analysis

Evaluation of user fee rates Success of exemption policies How revenues used

2. Impact of revenue foregone at health centre level

3. Additional needs in terms of drugs and HRH4. Where additional funds will come from5. Communication

McPake B, Brikci N, et al (forthcoming), Removal of user fees - learning from international experience, Health Policy and Planning 2011

Community-Based Health Insurance

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“any scheme managed and operated by an organization, other than a government or private for-profit company, that provides risk pooling to cover all or part of the costs of health care services” – usually voluntary

Pros– potential ability to collect revenue – pool funds – reach population groups that market based health

financing arrangements do not, such as population in the informal sector and socially excluded groups

Cons– small pool of funds/ fragmentation– Limited financial protection– Limited revenue collection– Poorest excluded– Difficult to transform into national level system

15

Limited role in low-income countries

Pros– enable the healthcare of the relatively affluent to be self-

financed,– free up public resources– encourage innovation and efficiency

Cons– discriminates in favour of healthy and young adults who use

little care – lead to market segmentation, cream skimming and exclusion of

vulnerable groups (such as the poor, ill and elderly)– creates a two-tier health system, where those with private

health insurance can access better quality services.– When subsidised by the state, it can prove to be very expensive

for the government.

Private Health Insurance

Social Health Insurance

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Definition: legally mandatory to obtain HI with a designated (statutory) 3rd party payer through contributions or premiums not related to risk that are kept separate from other legally mandated taxes or contributions

Pros• Relate initial payment to income rather than risk, • Increase financial accessibility• Potentially large risk pooling ie subsidisation/

redistribution• Increase transparency - politically acceptableCons• Tax on payroll: can increase overall production cost• Focuses on formal sector• Can create two tier health system• Tends to exclude those in greatest need• Feasibility issues in SSA

Tax financed systems

General pros• Payment related to income• Progressive • Potentially very large risk pool• Still largely untapped in SSAGeneral consFeasibility issues: administrative capacity,

tax avoidanceLack of transparency

General or hypothecated tax?

General taxes: Pros • Draws on broad revenue base• Allows trade-offs between health care and other areas

of public expenditure

Cons• Lack of transparency• Linked to economic growth• Feasibility issues: administrative capacity

General or hypothecated tax?

Hypothecated taxes:

Advantages• Ensures stable and increased revenue back• More transparent hence decreases resistance to taxation • Separates health from competing national priorities• Improved accountability• Less susceptible to political manipulation

Disadvantages• Hypothecation could be solely cosmetic• Too dependant on economic cycles• Can lead to rigidity in budgetary system where expenditures

are linked to revenue generated and not to policy decisions • May be to advantage of powerful pressure groups

Direct or indirect tax?• Direct taxes on individuals, HH and firms and collected by

government • Indirect taxes on transactions and commodities

Direct taxesAdvantages:• Usually progressive • Administratively simple when records of income etc exists

Disadvantages: • if informal market is large then need strong institutional

capacity• can create horizontal inequity:

– When income tax rates vary geographically– When some form of income are exempt from income tax– When some forms of expenditure are tax deductible

Direct or indirect tax?

Indirect taxes

Advantages: • highly visible • can promote heath if tax on health damaging goods

Disadvantages: • Indirect taxes are overall regressive as related to

consumption not overall income. In particular: – People with higher income save more and savings are not

subject to indirect taxes– People with lower income spend proportionately more of

their income on heavily taxed goods (ie food)– Many indirect taxes are set as lump-sum amounts (for

example vehicle licenses)

Tax Financed Systems

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Not politically acceptable? Hypothecated taxLarge informal sector? Example of GhanaPoor economic growth? Tax other sectors

such as corporationsLack of admin capacity? Regressive tax

rates

ConclusionHealth financing key to governanceHealth financing sits within health systemNo perfect answerUniversal coverage/ equity

User fees to be removed CBHI limited scope/ success Public financing mechanisms best in

principle

Thank you ...and some literature

World Health Report (2010), Health systems financing – the path to universal coverage, available at www.who.int

McIntyre D, Gilson L, Mutyambizi V (2005) Promoting equitable healthcare financing in the African context: current challenges and future prospects, Equinet Discussion Paper Number 27, October 2005, available on http://www.equinetafrica.org/bibl/docs/DIS27fin.pdf

Mills A (2007), Strategies to achieve universal coverage: are there lessons from middle income countries?, World Health Organisation, available on http://www.who.int/social_determinants/resources/csdh_media/universal_coverage_2007_en.pdf

Di john J (2006), The Political Economy of Taxation and Tax Reform in Developing Countries, Research Paper No. 2006/74, UNU World Institute for Development Economics Research (UNU-WIDER), available on http://62.237.131.23/publications/rps/rps2006/rp2006-74.pdf

Tuan Minh Le, Blanca Moreno-Dodson and Jeep Ojchaichaninthorn(2008), Expanding Taxable Capacity and Reaching Revenue Potential: Cross-Country Analysis, Policy Research Working Paper 4559, World Bank, available on http://ideas.repec.org/p/wbk/wbrwps/4559.html

SCUK (2008) Freeing up healthcare – a guide to removing user fees, available at www.savethechildren.org.uk

Carrin G and James C (2005) Social health insurance: key factors affecting the transition towards universal coverage, International Social Security Association, Vol 58 (1): 45-64, available on http://www.who.int/health_financing/issues/shi_key_factors.pdf

Ministry of Health

Ministry of Finance/ IMF

Poor population

Health workers

Kabanda Obed

Peter Nyakubega

Denis Bakomeza

Bertha A Matiya

Celestine Barigye

Michelle Ntukanyagwe

Henry T Kayondo

Alex Muhereza

Mukhtar Bulale

Aua Bale Anna Kilala Anne Musuva

Godknows Giya

Okello Ayen Daniel

Grace Malera Fathia Nour

John Wainaina Kenneth

Angela Kamakila

Betigel Workalemahu

Gordon Workalemahu