Fair and SustainableFair and SustainableHealth Financing Health Financing

Dick JonssonDick Jonsson

Department of EconomicsDepartment of EconomicsUniversity of ZambiaUniversity of Zambia

Presentation at the HEPNet Workshop on Social Health Insurance Presentation at the HEPNet Workshop on Social Health Insurance 28-30 May 2007 Cape Town28-30 May 2007 Cape Town

1. African countries have requested WHO to 1. African countries have requested WHO to provide support to fair and sustainable provide support to fair and sustainable health financing and to identify the health financing and to identify the approaches most suited to the context of approaches most suited to the context of the countries of the African Regionthe countries of the African Region

2. At the WHO 55 Regional Committee 2. At the WHO 55 Regional Committee meeting for Africa in Maputo 2005, meeting for Africa in Maputo 2005, Ministers of Health and Development Ministers of Health and Development Partners discussed Fair and Sustainable Partners discussed Fair and Sustainable Health FinancingHealth Financing

BackgroundBackground

1. The African countries are facing huge excess 1. The African countries are facing huge excess premature mortality, low life expectancy and premature mortality, low life expectancy and most of the Health MDG targets are not metmost of the Health MDG targets are not met

2. 80% of the 11 million deaths per year that 2. 80% of the 11 million deaths per year that occur in Africa results from preventable occur in Africa results from preventable diseasesdiseases

3. HIV/AIDS, lower respiratory tract infection, 3. HIV/AIDS, lower respiratory tract infection, malaria, diarrhoeal diseases and maternal malaria, diarrhoeal diseases and maternal and prenatal conditions accounts for 54% of and prenatal conditions accounts for 54% of the deaths the deaths

4. This heavy burdens of disease have 4. This heavy burdens of disease have contributed significantly to Africa’s contributed significantly to Africa’s chronically poor economic performance and chronically poor economic performance and povertypoverty

Health ChallengesHealth Challenges

1. More than 50 percent of the countries in 1. More than 50 percent of the countries in the African region are severely indebtedthe African region are severely indebted

2. Big informal sector and high 2. Big informal sector and high unemploymentunemployment

3. High levels of poverty and inequitable 3. High levels of poverty and inequitable distribution of income; the human poverty distribution of income; the human poverty index is 40% index is 40%

4. 44% of population are living on less than 4. 44% of population are living on less than one USD per day one USD per day

Socio-Economic Context - Socio-Economic Context - PovertyPoverty

1. 40% of the population lack access to 1. 40% of the population lack access to safe drinking watersafe drinking water

2. 40% of adults in the region are illiterate2. 40% of adults in the region are illiterate

3. Primary school enrolment is 63% and 3. Primary school enrolment is 63% and secondary school enrolment is 21%secondary school enrolment is 21%

4. 47% of the population in the region lack 4. 47% of the population in the region lack access to adequate sanitation facilitiesaccess to adequate sanitation facilities

Water, Education and Water, Education and SanitationSanitation

1. African countries spend in average 5.7% of 1. African countries spend in average 5.7% of their GDP on health, (same as in 1995, 8.2% their GDP on health, (same as in 1995, 8.2% for all countries worldwide)for all countries worldwide)

2. 35 countries (76% of all) spend less than 2. 35 countries (76% of all) spend less than USD 34 per capita, regarded as the minimum USD 34 per capita, regarded as the minimum for providing an essential health care for providing an essential health care packagepackage

3. The proportion of governmental health 3. The proportion of governmental health spending of total government spending is 8% spending of total government spending is 8%

4. 44 countries (96% of all) spend less than 4. 44 countries (96% of all) spend less than 15% (Abuja benchmark) of national budgets 15% (Abuja benchmark) of national budgets on healthon health

Total Health ExpenditureTotal Health Expenditure

1. Private health expenditure amounts to be 56% 1. Private health expenditure amounts to be 56% of total health expenditure (2 times more than of total health expenditure (2 times more than in Europe)in Europe)

2. The health systems of most African countries 2. The health systems of most African countries depend largely on household’s direct out-of-depend largely on household’s direct out-of-pocket payments; averaged 28% of total health pocket payments; averaged 28% of total health spendingspending

3. Government spending on health is 44% of the 3. Government spending on health is 44% of the total health expendituretotal health expenditure

4. The poorest and most indebted countries rely 4. The poorest and most indebted countries rely heavily on external resources; 28% of total heavily on external resources; 28% of total governmental health expenditures (4% in richer governmental health expenditures (4% in richer countries)countries)

Private/Public Health Private/Public Health ExpenditureExpenditure

PrepaymentsPrepayments

1. 17 countries in the region (35% of all) 1. 17 countries in the region (35% of all) are using some type of pre paid plansare using some type of pre paid plans

2. Few countries in the region have 2. Few countries in the region have introduced social health insurance introduced social health insurance schemes; corresponding to 3% of the schemes; corresponding to 3% of the total health expendituretotal health expenditure

3. Several countries in the region have 3. Several countries in the region have been implementing community health been implementing community health insurance schemes and some medical insurance schemes and some medical savings accountssavings accounts

1. Failure of establishing cost recovery safety1. Failure of establishing cost recovery safety net mechanisms in protecting the poornet mechanisms in protecting the poor

2. Lack of financial resources to produce good2. Lack of financial resources to produce good health for allhealth for all

3. Low income countries have a small revenue 3. Low income countries have a small revenue base to generate domestic resources base to generate domestic resources

4. Inefficient use of available health resources4. Inefficient use of available health resources

5. Lack of human resources is a major 5. Lack of human resources is a major bottleneck in achieving efficient health carebottleneck in achieving efficient health care

Health Financing Health Financing Challenges Challenges

6. High turnover of health staff, mainly due to 6. High turnover of health staff, mainly due to poor financial incentivespoor financial incentives

7. Weak management capacity to provide 7. Weak management capacity to provide essential and quality health care servicesessential and quality health care services

8. Limited technical capacity to manage 8. Limited technical capacity to manage complex complex

health financing and equity issues health financing and equity issues

9. Weak monitoring and analytical capacity 9. Weak monitoring and analytical capacity and and

evidence not being used in health policy evidence not being used in health policy making and managementmaking and management

Health Financing Health Financing ChallengesChallenges

StewardshipOversight

Financing Collecting, Pooling,

Purchasing

FUNCTIONSFUNCTIONS OUTCOMESOUTCOMES

Health

Fair financing

Responsiveness People’s non-medical

expectationsResourcesInvestment and

training

Delivering servicesProvision

HEALTH SYSTEM FRAMEWORKHEALTH SYSTEM FRAMEWORK

GDP

Tax Systems

Labor Market

External Aid

NaturalResourceRevenues

resourceresourcebasebase

PopulationPopulationCollectionCollection

PoolingPooling paymentspayments

ServiceServiceprovidersproviders

Income

Region

Demographics

Economic Activity

Health Risk

Out-of-pocketCo-payments

VoluntaryPrepaymentMandatoryPrepayment

Indir Taxes

Direct Taxes

Private InsuranceCompanies

NGOs

Public InsuranceAgencies

Centrl Government

Local Governments

Fee for Service

Capitation

Budgeting

Salaries

Prospective

Retrospective

Professionals

Public/private facilities

NGOs

Hospitals

Districts

Health FinancingHealth FinancingFunctionsFunctions

PurchasingPurchasing/

Health Financing Health Financing InstrumentsInstruments

1. General tax revenue/earmarked taxes1. General tax revenue/earmarked taxes

2. User fees (cost-sharing/cost-recovery)2. User fees (cost-sharing/cost-recovery)

3. Health insurance3. Health insurance- Social- Social

- - CommunityCommunity- Private- Private

4. Medical savings accounts4. Medical savings accounts

5. Donor funds5. Donor funds

Fair and Sustainable Health Fair and Sustainable Health FinancingFinancing

1.1. Financial protection Financial protection

- Reduce the risk that households will face - Reduce the risk that households will face catastrophic health expenditurescatastrophic health expenditures

- Cross subsidisation of the poor and - Cross subsidisation of the poor and vulnerable by healthy and wealthy sectors vulnerable by healthy and wealthy sectors of societyof society

- Minimize large out-of-pocket spending on - Minimize large out-of-pocket spending on health, such as user feeshealth, such as user fees

- Introduce or strengthen prepaid plans - Introduce or strengthen prepaid plans such such as health insurance and publicly subsidised as health insurance and publicly subsidised servicesservices

Fair and Sustainable Health Fair and Sustainable Health FinancingFinancing

2.2. Improve equity and efficiency in Improve equity and efficiency in allocation, access to and utilization of allocation, access to and utilization of existing health care resourcesexisting health care resources

3.3. Increase external and domestic funding Increase external and domestic funding to benefit the poorto benefit the poor

- Mobilize domestic resources by using - Mobilize domestic resources by using efficient revenue collection methodsefficient revenue collection methods

4.4. Optimise the use of different financing Optimise the use of different financing sources and payments mechanisms to sources and payments mechanisms to create balanced incentives for health create balanced incentives for health providers with regard to equity, providers with regard to equity, efficiency, productivity and quality of efficiency, productivity and quality of health care deliveryhealth care delivery

Recognize the importance of the Recognize the importance of the country's:country's:

1. Health situation and epidemiology1. Health situation and epidemiology

2. Structure and capacity of the health system2. Structure and capacity of the health system

3. Macroeconomic constraints3. Macroeconomic constraints

4. Socioeconomic conditions4. Socioeconomic conditions

5. Cultural values5. Cultural values

6. Political situation 6. Political situation

Contextual ApproachContextual Approach

Health financing strategies and action Health financing strategies and action plans plans

to be developed with reference to:to be developed with reference to:

1. National Health Policies and Strategies1. National Health Policies and Strategies

2. Millennium Development Goals (MDGs)2. Millennium Development Goals (MDGs)

3. Poverty Reduction Strategy Paper (PRSP) 3. Poverty Reduction Strategy Paper (PRSP) frameworksframeworks

4. Collaboration between governments and 4. Collaboration between governments and development partners, guided by the development partners, guided by the Paris Declaration of 2005 of Alignment Paris Declaration of 2005 of Alignment and Harmonization, e.g.and Harmonization, e.g. effectiveness,effectiveness, division of labour,division of labour, use of SWAps use of SWAps

Integration - InteractionIntegration - Interaction

1. Analysis of current levels of health 1. Analysis of current levels of health spending, sources and the use of those spending, sources and the use of those sources (NHA data)sources (NHA data)

2. Economic viability analyses of various 2. Economic viability analyses of various financing optionsfinancing options

3. Health policy analysis3. Health policy analysis

4. Legal analysis4. Legal analysis

5. Socio-political environment analysis5. Socio-political environment analysis

6. Training and research6. Training and research

Use of Evidence Based Use of Evidence Based InformationInformation

1. 1. High disease burden and high levels of High disease burden and high levels of povertypoverty

2. Huge informal sector, high unemployment2. Huge informal sector, high unemployment and narrow tax baseand narrow tax base

3. Lack of human resources and management 3. Lack of human resources and management capacity in health carecapacity in health care

4. Limited analytical capacity in monitoring 4. Limited analytical capacity in monitoring and and

evaluationevaluation

5. Limited evidence based data available for 5. Limited evidence based data available for use use

in health policy and managementin health policy and management

Implementation Constraints Implementation Constraints

1. Strong political commitment1. Strong political commitment

2. Acceptability to clients, professionals, 2. Acceptability to clients, professionals,

politicians, collaboration partners and politicians, collaboration partners and

the general publicthe general public

3. Proper management, monitoring and 3. Proper management, monitoring and

evaluationevaluation

Enabling Factors in Enabling Factors in ImplementationImplementation

4. Good governance, transparency and 4. Good governance, transparency and

accountability accountability

5. Active partnership, coordination and 5. Active partnership, coordination and

collaboration between governments, collaboration between governments,

development partners, training and development partners, training and

research institutionsresearch institutions

6. Adequate financial and technical 6. Adequate financial and technical supportsupport

Enabling Factors in Enabling Factors in ImplementationImplementation

Thank you!Thank you!