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
The fiscal dimension of health financing
refers to the size or quantum of funding
via the state. It is generally strongly
influenced by:


the values of the society and by extension
the role of the state in the particular
environment ; and
and the values that guide government policy
interventions.
2
 Fiscal
implications
are
the
consequences that result from the
dimension of the fiscal intervention.
The main issue here would be the
sustainability of the fiscal support.
3

As economists practicing in the Caribbean
one cannot but reflect on Sir Arthur Lewis’
(1948) dictum that ”…good economics
begins with a concern for the conditions
under which people live...”

In this regard the two issues that matter
will be 1)the adequacy and reliability of
access – lined to economic welfare and 2)
the cost or affordability of health care –
linked to economic viability.
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
The assumption we make is that fiscal
policy is driven by five main
considerations that influence the fiscal
dimension and implications of financing
health care services:
1.
2.
government’s perception of its role in the
society—a perception which would be
influenced by the value system that
guides its policymaking;
the level of financial resources available
to the government;
5
3. government’s understanding of certain key
causal relationships, particularly the link
between health spending and health
outcomes as well as the impact of health
on the functioning of the economy;
4.
government’s
perception
of
the
socioeconomic needs of particular
segments of the population; and
5. contingent civic or political pressures to
which the policy makers feel they should
be responsive.
6
Driver 1: Role of the Government

Health care is considered a merit good
by Caribbean governments and this is
reflected in fiscal planning.

It is also true that Ministries of Health
hold themselves responsible for the
quality of all care, including that provided
at private health facilities.

Governments in the region have two
main concerns in regard to fiscal outlay
on health:
the impact of public health spending and
the efficiency of that spending.
1.
2.
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
Total Revenues
In the Caribbean countries under study,
total revenue experienced modest
growth in some countries while in other
countries, such as Trinidad and Tobago,
the growth in total revenue was
significant.

Seven out of ten countries considered
experienced average annual revenue
growth between 6% and 9%. Two
countries experienced growth higher than
10% and only one country saw growth of
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Driver 2: Availability of Resources and the Propensity
to spend on Health

Public Health Spending out of Revenues
 The
Bahamas registered the highest
percentage of public health care spending out
of revenues averaging 14% between 1999 and
2005.
Closely followed by Antigua and
Barbuda and Barbados.

For the same period, Trinidad and Tobago
recorded the lowest percentage share of
public health care spending out of revenues
averaging 6%.
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1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Antigua &
Barbuda
14.2
13.0
12.5
11.8
12.1
12.1
11.4
12.0
12.4
12.1
Bahamas
13.9
13.7
13.8
14.4
14.3
13.6
14.6
14.7
15.1
13.8
Barbados
12.7
11.7
11.8
12.0
12.0
12.2
12.3
12.6
12.3
11.2
Belize
5.3
5.6
5.6
5.5
5.3
5.0
5.3
5.6
6.5
6.6
Cuba
9.3
10.0
10.3
11.1
10.8
11.4
11.2
11.2
11.2
9.6
Dominica
11.4
11.8
11.8
12.8
9.5
11.3
11.9
11.6
11.9
9.8
Grenada
9.3
9.2
9.5
11.8
9.3
15.1
10.7
12.4
11.1
9.6
Guyana
9.3
9.6
10.0
10.0
10.0
10.0
10.7
9.9
10.0
8.3
20.3
20.2
19.7
18.5
20.7
23.8
23.8
24.2
23.9
23.8
5.9
7.7
7.4
5.6
6.6
4.3
5.9
3.9
4.7
3.5
9.7
10.9
10.8
10.4
10.4
10.9
9.7
11.4
9.6
9.6
St. Lucia
St. Vincent and
the Grenadines
11.1
11.5
10.1
10.2
10.7
11.8
10.6
10.3
10.8
10.6
12.1
9.2
8.5
8.5
10.8
10.1
10.7
11.0
11.0
10.9
Suriname
15.5
11.9
8.8
10.7
9.7
10.8
10.4
10.4
9.7
9.8
Haiti
Jamaica
St. Kitts and
Nevis
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National Health Spending
 When national spending on health is
taken into consideration the government
is the biggest spender in every country.
 In Guyana, over the period 1996-2005,
the government accounted for 83% of
national
health
expenditure,
and
averaged 71% in Antigua & Barbuda,
Dominica and Grenada.

On the other end of the scale, in Trinidad and
Tobago the government’s share of national
health spending averaged 42% over the same
period.
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
Public Health Spending as % GDP
Country
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Antigua and Barbuda
3
3
3
3
3
4
4
4
3
3
Barbados
4
4
4
4
4
5
5
5
5
4
Dominica
4
4
4
5
5
4
5
5
4
4
Grenada
4
4
4
5
4
7
6
6
6
6
Guyana
4
4
4
4
5
4
5
4
4
4
Jamaica
3
4
3
3
3
3
3
2
3
2
Saint Kitts and Nevis
3
3
3
3
4
3
3
3
3
3
Saint Lucia
Saint Vincent & the
Grenadines
3
3
3
3
3
3
3
3
3
3
4
4
3
3
4
4
4
4
4
4
Trinidad and Tobago
2
2
2
2
1
1
1
1
1
2
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Public Health Spending and GDP:
Fiscal Commitment



Note that the trends are all very stable
The overall average share turns out to be
3.6% with a range between 1.5% and
5.2%.
In spite the rhetoric the region is well
below the international (universal
coverage) range of between 6% and 12%
of GDP.
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16
14
12
St. Kitts and Nevis
10
St. Lucia
St. Vincent and the Grenadines
8
Suriname
Trinidad and Tobago
6
4
2
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
14
700
600
500
Antigua
400
Bahamas
Barbados
Belize
300
Cuba
200
100
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
15
400
350
300
250
St. Kitts and Nevis
St. Lucia
200
St. Vincent and the Grenadines
Suriname
Trinidad & Tobago
150
100
50
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
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
Public Health Spending and Per Capita GDP

Over the ten-year period 1996-2005, the observed
tendency particularly in Jamaica, was for the share of
government spending on health to vary inversely with
per capita income (an 11% percentage decrease
between period points).

This phenomenon also occurred to a lesser degree in
Barbados (-5%); Dominica (-6%), St. Lucia (-3%) and St.
Vincent and the Grenadines (-4%).

This countercyclical trend may be an indication of the
government’s concern for the equity dimension of its
fiscal support.
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
If fiscal outlays are to effectively impact on health
status we would also expect to observe allocations
in a number of health-related areas such as :
 population feeding programmes;
 the expansion of sport and recreational facilities;
 subsidies on selected food items as well as on
selected exercise and recreational equipment.

Given the proliferation of chronic diseases in the
Caribbean, these would be areas where
governments may be expected to incur a cost.
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
The government’s perception of the socioeconomic
needs of particular segments of the population also
impacts on fiscal policy. For example, in the
Caribbean the health of the following groups has
always been of immense interest to governments:




women;
children; and
the elderly.
Ideally, policy would be informed by up-to-date
health needs assessments. In practice, in the
Caribbean, the public health systems are structured
to ensure that the needs of the specific groups
mentioned are looked after.
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

In the Caribbean today there are
contingent pressures emanating from
issues like crime and the HIV/AIDS
epidemic.
The latter has led countries of the region
to prepare National HIV/AIDS response
programmes almost all of which benefit
from international assistance and domestic
budgetary support.
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
The major issues surrounding the fiscal implications
of public health care spending are:
 Affordability/Sustainability.
Given government
commitment, are the projected financing requirements
feasible in the light of expected future government
revenues? If they are not, what kinds of adjustments
can we expect? Tax reforms to yield larger revenues
or a more modest approach to universal health care?

Possibility of a bonus. An externality resulting from
the government’s fiscal support? If health expenditure
has a meaningful productivity impact on the economy
then this human capital effect will strengthen the fiscal
position of the government, by expanding the revenue
base of the country.
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
In this Caribbean context, with a significant
burden of chronic disease and a growing
burden of HIV/AIDS, and with
governments acknowledging a major
responsibility in the area of health the
challenge of fiscal capacity will remain.

Starting, as most of the countries do, with
chronic fiscal deficits, the prospects for
sustaining a universalist posture are not
favorable. The region is at present
significantly below international levels. The
requirement for external support for
specific areas will remain, certainly for the
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A ray of hope? (1)

The ray of hope in all this lies in four things:
i) the agreement of countries to a regional response to the
HIV/AIDS epidemic, through PANCAP – the Pan Caribbean
Partnership Against HIV/AIDS . This is a model which can
be applied to other areas where we are all affected
ii) the collaboration which has already begun in the area of
chronic diseases;
iii) the preliminary discussions which have begun in respect of a
regionally funded basket of essential services and
iv) The growing recognition by governments of the region that
the health systems of the region need to be modernized by
the introduction of health information systems to monitor
the quality of care and to track the costs of the system with
a view to effecting the cost controls which would generate
higher levels of efficiency.
The Road Ahead
So is universal health coverage
possible in the Caribbean?
It would seem that regional
cooperation, tax reform and a
commitment to higher levels of
efficiency are the three pillars that
will be needed to realize and
sustain universal coverage in the
Caribbean.