Health financing in Africa: Can we fill the gaps? Health Systems Research Symposium Laurel Hatt, MPH, PhD Health Systems 20/20 Project, Abt Associates Inc. My name is Laurel Hatt and I’m here on behalf of Health Systems 20/20. I’d like to give you a quick overview of the current state of health financing in sub-Saharan Africa, just to set the stage for the other presentations today. This presentation will give very basic background information on the health financing scene.

Objectives Review the current health financing situation in sub-Saharan Africa Analyze projected future financing gaps Highlight policy recommendations that emerged from recent expert consultations

Data and geographic scope Data sources: Health expenditure and population data from the WHO’s Global Health Observatory (2007 data) GDP per capita from the IMF’s World Economic Outlook database Geographic scope: 40 countries in sub-Saharan Africa Excluded South Africa and 5 countries with populations < 1 million All analyses were weighted by population size. Nigeria thus has a very heavy impact on all estimates.

Overview of health financing indicators in sub-Saharan Africa today Average per capita spending on health: $41 Lowest in the world $33 if Nigeria excluded Private spending: 60% of total Out-of-pocket spending: 83% of private spending A few basic statistics on the levels and sources of health financing in Africa: --Per capita spending on health in SSA – excluding South Africa – is the lowest in the world, on par with South Asia. --Total per capita spending on health is $41; if Nigeria is excluded, this figure drops to $33. --The average also masks a great deal of variability across countries in the region. There are 2 main sources of health financing: -- Private spending (at 60% of total) is higher than any other WHO region in the world, except South Asia. This is predominantly OOP spending – the most regressive form of health financing – and it increased in the last year (from 44%) “Other” private spending includes insurance, employers, and NGOs. ($4.10) -- Government spending (at 40%) is lower than anywhere else in the world except South Asia. ($16.50 per person – up from $12 in 2006) Donor assistance – overlaps with public and private spending. --Sub-Saharan Africa’s dependence on external resources for health is greater than anywhere else in the world (cf. SEAsia: 1.7%, Eastern Mediterranean: 1.8%) --There is no easy way to say what are truly “domestic” public resources vs. public resources that are supported by donors Without Nigeria: Private spending = 51% OOP = 38% Other private = 13% Public = 49% External = 20%

Out-of-pocket spending accounts for 50% of total health spending in SSA This slide demonstrates the extent to which individual countries rely on each type of financing. Green = OOP Blue = public Grey = other private Large variation in dependence on each source Interesting to note that there are regional differences in reliance on OOP spending: West Africa – more heavily dependent on OOP spending Southern Africa – more public/pooled spending Note: ‘Other private spending’ includes firms’ expenditure on health, pooled spending, and non-profit institutions serving mainly households.

Indicators for adequacy of resources for health Commission on Macroeconomics and Health (2001): $41/person in current dollars WHO High Level Taskforce on International Innovative Financing for Health Systems (2009): $54/person to meet health MDGs Abuja target (2001): 15% of government spending

Current levels of government health spending The next slide gives a snapshot of current gaps between government health spending and different health financing targets. The WHO Commission on Macroeconomics and Health estimated in 2001 that it would cost $34 to provide a basic package of essential services [$41 in current prices]. A WHO working group (2008) revised this estimate to $54 to meet MDGs 4 and 5, including health systems strengthening efforts (financing, governance, and service delivery). This slide gives a visual snapshot of current gaps between government health spending and the $54 target. The blue bars represent 2007 government spending on health, in US dollars. 6 “higher income” countries already spend more than $54 on health.

Current levels of government and private health spending The gray bars add in private spending. This brings 6 more countries over the $54 threshold. Currently, only 12 out of 40 countries in sub-Saharan Africa* spend at least $54 per capita on health (public + private) Ghana, Nigeria, Senegal, Zambia, Cameroon, Zimbabwe, Swaziland, Namibia, Angola, Mauritius, Gabon, Botswana

Hypothetical levels of total spending if the Abuja target were met today Finally,the green bars show levels of government spending IF the Abuja target were met today. This brings another 4 countries over the $54 threshold. The Abuja target is another key health financing indicator – in 2001 countries agreed to devote 15% of government budgets to health. It is an important goal, but meeting the Abuja target alone will not solve Africa’s health financing problems. -- Thus, if all 40 SSA governments met the Abuja target today: 16 countries would meet the $54 threshold (Ghana, Nigeria, Senegal, Zambia, Cameroon, Zimbabwe, Swaziland, Namibia, Angola, Mauritius, Gabon, Botswana Lesotho, Cote d’Ivoire, Sudan, and Congo) -- However, 24 countries are still below this target. Of these remaining 24 countries, 13 would not spend even half ($27) of what the WHO estimates as the level of per capita spending necessary to ensure an essential package of health services for the population --However, it is important to note that countries in the higher GDP groups are much more likely to spend $54 level. It is the countries with GDPs less than $500 which face the most severe challenges.

Most poor SSA governments will not meet the $54 target by 2020, even with optimistic assumptions --Total government expenditures increase by 5% per year --Governments increase health spending by 1 perc. point per year until they reach the Abuja target --2% population growth or less This point is even more clearly demonstrated by a projection analysis. To look at these issues with a little more depth, We took actual government health spending in 2007, and then applied some very optimistic assumptions: --that the budget envelopes governments had to work with increased by 5% per year --that population growth was slow to moderate (2% or less) --and that governments steadily worked to reach the Abuja target. Observed data from 2000 to 2007 is on the left, and from 2008 to 2020 we have projected values.

Adding in spending from households and other private sources We find that 10 out of 11 countries with GDPs of $1000 or more are already spending more than $54 on health, and their spending will grow dramatically. All (9 out of 9) countries with GDPs over $500 will cross the $34 threshold before 2020. But 14 out of 20 countries with GDPs under $500 would not reach the $54 spending level – even by 2020 Moreover, 2% population growth is optimistic for most countries – 28 out of 40 countries had growth rates greater than 2%

Summary Compared to other regions, SSA has the lowest health spending levels and heavy dependence on out-of-pocket financing Even with optimistic assumptions, financing gaps are unlikely to be closed in the medium term Low per capita incomes in Africa Limited ability to collect taxes – small formal sector Donors already contribute 13% of total spending Health systems bottlenecks – low absorptive capacity, low budget execution

Can we fill the gaps? What are the “best bets” for increasing resources for health and leveraging existing health spending in sub-Saharan Africa? Roundtable discussion among experts convened by Health Systems 20/20 and Results for Development’s Health Financing Task Force Experts from World Bank, Brookings Institution, Georgetown University, IMF, UNICEF

Approaches to consider Leverage the private sector Increase access to capital, promote investment, improve regulation Explore new global health taxes Support innovative financing mechanisms to get new technologies to the market Improve efficiency of donor spending – coordination, on-budget spending Strengthen governance and public financial management Develop and strengthen health insurance systems Implement results-based financing

Thank you! “Toward Solving Health Financing Challenges in Africa – A Way Forward” is available at www.hs2020.org