Transcript Presentation Title - National

Health Financing in Africa:
Challenges and Opportunities
for Expanding Access to
Quality Health care
Chris Atim, PhD
Executive 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
OBJECTIVES OF PRESENTATION AND
PAPER
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
HEALTH FINANCING PARADIGM IN SSA


Current 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
Proposed 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
3
HEALTH FINANCING: TARGETS

Abuja: Government spending on health
should be at least 15% of total government
spending



Commission on Macroeconomics &
Health (CMH): Estimated $34 per capita for
a basic package of health service



East Asia & Pacific: 10.1%
Latin America and the Caribbean: 12.5%
East Asia & Pacific: $62 (current US$)
Latin America and the Caribbean: $272 (current US$)
Are targets meaningful? Relevant?
15.0
B o t s wana
14.5
Z im babwe
Sao T o m e
14.0
Ghana
13.0
Gam bia
13.0
Percentage
of national
budgets
allocated to
health
sector
13.0
T anzania
N am ibia
12.0
Uganda
12.0
11.3
Libya
11.0
M o zam bique
10.0
So ut h A f ric a
Senegal
9.0
Z am bia
9.0
M alawi
9.0
M adagas c ar
9.0
8.1
T unis ia
T o go
8.0
M aurit ania
8.0
M ali
8.0
C ape Verde
8.0
Swaziland
8.0
R wanda
8.0
M aurit ius
8.0
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.
7.2
C o t e d'Iv o ire
7.2
D jibo ut i
B urk ina F as o
7.0
Kenya
7.0
CA R
7.0
6.0
N iger
5.0
A ngo la
4.8
Sudan
N igeria
4.0
Eq. Guinea
4.0
DRC
4.0
3.3
Egypt
C had
3.0
B urundi
3.0
2.0
Et hio pia
0.0
5.0
10.0
15.0
20.0
5
HEALTH FINANCING LEVELS ARE LOW – THE $34
PACKAGE OF BASIC HEALTH SERVICES
The CMH target
Per capita health spending, 2004
Cameroon
Lesotho
Côte d'Ivoire
Zambia
Congo
Zimbabw e
Ghana
Angola
Burkina Faso
Benin
Mali
Nigeria
Guinea
Kenya
Chad
Malaw i
Uganda
Gambia
Togo
Rw anda
Mauritania
CAR
Mozambique
Tanzania
Eritrea
GuineaNiger
Liberia
Madagascar
Sierra Leone
Ethiopia
DRC
Burundi
Few countries
spend $34+
The CMH Target
0
10
Per capita govt. expenditure on health
20
30
40
Out-of-pocket expenditure on health
50
60
Private pooled expenditure on health
Source: WHO SIS
Note: 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.
6
…WHAT DIFFERENCE WOULD THE ABUJA
TARGET MAKE?
public spending
private spending
Abuja shortfall in public spending
$80
$70
health expenditure (US$, 2004)
$60
$50
CMH target $34
$40
$30
$20
$10
<$250
$250-$499
country, sorted by GDP per capita
Source: World Bank, WDI 2007; author’s calculations.
$500-$999
Congo
Angola
Côte d'Ivoire
Cameroon
Senegal
Lesotho
Benin
Chad
Nigeria
Zimbabwe
Kenya
Zambia
Mauritania
Ghana
Burkina Faso
Guinea
Mali
Togo
CAR
Tanzania
Mozambique
Gambia
Uganda
Niger
Madagascar
Rwanda
Sierra Leone
Malawi
Liberia
Eritrea
Ethiopia
DR Congo
Burundi
$-
$1,000+
THE 15% ABUJA TARGET IS IMPORTANT



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
AFRICA REGION IS OFF-TRACK TO MEET THE
MDGS

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
Sources: Disease Control Priorities Project, 2007; and African Development Bank, 2002.
9
HEAVY DEPENDENCE ON DONOR FUNDING
RAISES CONCERNS: SUSTAINABILITY, PRIORITIES
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.
HEAVY DEPENDENCE ON DONOR FUNDING RAISES
SUSTAINABILITY, PREDICTABILITY AND VOLATILITY
CONCERNS: RWANDA
100%
90%
33%
80%
70%
50%
52%
42%
53%
60%
50%
42%
40%
30%
40%
25%
30%
28%
20%
10%
0%
10%
1998
Source: Rwanda NHA 1998-2006
18%
25%
32%
2000
2002
2003
Public
Private
Donor
19%
2006
MORE MONEY IS CERTAINLY NEEDED…
Health financing in Sub-Saharan Africa
Regional averages, 2004
Indicator
Health spending as a
percent of GDP
Current level
4.7%
Target level
>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
Source: WHO SIS; World Bank World Development Indicators 2007 (2004 data).
12
…BUT MONEY ALONE IS NOT ENOUGH
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
MACROECONOMIC CONSTRAINTS /OPPORTUNITIES
AFFECTING PUBLIC SECTOR HEALTH FINANCING

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
IMPACT OF CURRENT GLOBAL CRISIS

Fall in commodity prices due to reduced demand – oil, agric
produce, minerals, tourism all affected




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



Thereby affecting Govt revenues and fiscal space for health spending
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
HEALTH SYSTEMS CONSTRAINTS ON
PUBLIC SECTOR FINANCING


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)
WHAT COMPLEMENTARY OR ADDITIONAL
HEALTH FINANCING MECHANISMS ARE THERE?

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 CBHI

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 /SOCIAL HEALTH INSURANCE
SCHEMES (NHIS/SHI)

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
EXAMPLE: NHIS IN GHANA





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
REVENUE RAISING AND RISK POOLING
THROUGH INSURANCE - SUMMARY

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
PERFORMANCE-BASED FINANCING:
DEFINITIONS AND EXAMPLES
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
PERFORMANCE-BASED FINANCING

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
INNOVATIVE INTERNATIONAL FINANCING
MECHANISMS

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
INNOVATIVE INTERNATIONAL FINANCING
MECHANISMS

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
MAIN MESSAGES






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
THANK YOU