Health Care Financing in Pakistan: Trends and Issues Dr. Rashid Jooma Director General Ministry of Health, Pakistan

Purpose of a Sound Health Care Financing Policy Beyond “how much should we spend…” A sound HCF policy should look at: The Overall need and Available funds How money flows to ensure the system reaches its objectives Creating incentives to enhance health care delivery Provide social protection against routine and catastrophic health care expenses

The Current Government Setup Federal Policy Budget Surveillance M&E Reporting Funds Oversight Direct Oversight M&E Provincial Reporting Funds Oversight Direct Implementation M&E District

Current Health Care Spending Total: Rs 152 billion (2% of GDP) Or about USD 17 per capita Government contribution is about a quarter Reflects only about a 50% increase over the past 15 years (when adjusted for inflation and population growth) Based on 2005-6 data for government funding. Private data come from HIES 1998. There are no latter surveys that look at this. The HIES 2007-8 resumed looking at health expenses. These results are not available to me. The 152 billion is the sum of direct payment by the 3 levels of government and out of pocket expenses by households, but does not include spending by non-MoH government (military, police, semi govt orgs like PIA etc), private insurers and other 3rd party payers (ie private employers paying for their employees)

Where it goes Government: prevention, curative care and infrastructure Private sector and NGOs: mostly curative care

Some current restraints Limited revenue collection (<15% of GDP) Limited revenue collection by provincial or district governments Distinction between recurrent and development budgets, sometimes with management of each with different depts Within sub-units (eg hospitals) different things are paid from different funding sources Under utilization of allocated funds For eg, a hospital is built with development funds and run on recurrent budgets. However the many prevention programs in the Federal MoH are all run on development funds

Is increased funding needed… Absolutely! However, this is not the final answer Health outcomes are not well correlated with health spending In fact setting a total as a target may not be very helpful Equally important to prioritize funding design technically sound interventions and monitor results that are geared towards effective and equitable targets The countries with child mortality rates below 30 per 1,000 have public health expenditure spending ranging from 1.4 to 8.7 of GDP and $7 to $4,200 per capita (Savedoff, What should a country spend on health care? Health Affairs, volume 26 (4), July/August 2007) US outspends Canada by 200-300% per capita but Canada has better health outcomes Vital to emphasize that while the total funding is important, it is more important to see how it is spent – or in our case not spent, MoH routinely underspends its budget allocations

General Suggestions Need an overarching plan that looks at the overall health needs to establish the funding envelope (and also assigns deliverables and responsibilities for different stakeholders) Making sub-units (for e.g. districts or even clinics) accountable for their budgets and their deliverables Definition of “minimum essential” packages Assign accountability and responsibility for services Financial and budgetary implications (rewards or otherwise) tied to quality of services provided M&E framework including results and finances

Raising Adequate funds Taxation Earmarking Approach external donors Allowing provincial or local revenues to go directly to health locally User fees Pakistan has one of the lowest taxation rates of around 15% of GDP. Earmarking would be allocating certain taxes for health. Same can be applied to donor funds. For eg you can say that xxx% of sales tax on pharmaceuticals goes for health. Or a new tax on tobacco goes to health (the Super Fund in the USA is exactly this) At the moment all external donors (bi- or multi lateral and others) combined account for <2% of the total health care spending User fees can be increased rather than waived. Currently public health care costs about 85% of the same care in the private sector. This is because there are so many out of pocket expenses in the public sector. In part these can be controlled by improving funds at these facilities which the user fees can contribute to. On the other hand the nominal user fees neither contribute significantly to the govt suppot nor are they a major burden on the consumers

Pooling Risk Catastrophic health insurance is being provided in Pakistan via the Rural Support Networks Government leverages expenses related to natural disasters Government increases coverage and payments for expensive healthcare such as hospitalization, esp when these payments are pro-rated acc to incomes Acc to a World Bank survey: Social Protection in Pakistan, Managing Household Risks and Vulnerability (2007), 54% of all economic shocks faced by people were due to health related expenses and that prople coped with thisby either reducing food intake (33%), putting a child to work (10%) or pulling a child from school (8%).

Equitable Provision of Services Pro-rate user fees and other expenses acc to income of clients Conditional Cash Transfers (CCT) to attract clients to prevention services and as social support for the poorest Support funds for indigent care (zakat) NGO and philanthropic support Pro-ration would mean that the poor get a higher (or complete) subsidy on their expenses. This can only work if the govt. has significant user fees or means of paying for services on behalf of the clients Conditional Cash Transfers are payments made to clients if they avail certain services. Typically they are a demand creation mechanism (eg tubal ligation scheme with MoPW). However, they can also be used to provide social support to the poor, eg cash is someone’s child completes all vaccines etc. Mexico does this for school enrolment, vaccines, antenatal and postnatal care and some primary health.

Efficient Provision of Services Adequate funding for what is planned Timely and efficient disbursement of funds A results monitoring system Pilot trials of Results based financing Delegate control over budgets, implementation as well as responsibility to local implementers Local community involvement in planning and then monitoring services Too often funds are under allocated for what is intended. These lead to under performance and low morale. Either don’t plan activities or plan them with adequate funds. A results based monitoring system would ensure that under performance and its causes are highlighted in real time so that they can be addressed. Results based financing would 1) provide incentives for good performance and 2) penalties for under performance. Eg are in Afghanistan (vaccination) and Bangladesh (many measures). Allowing local control means that people are responsible for what they achieve. By not allowing them to control budgets or aspects of implementation (ie, human resources etc), we are currently giving local managers excuses (often legitimate) for failure.

Role of non-state actors Providers of quality care (Rural Support Networks, charitable hospitals/ clinics) Providers of essential services (Edhi) Providers of social safety nets (Edhi, other NGOs) Providers of employment or employment/ income generation (include micro credit, vocational training) Piloting new health care models (AKHS) Funding some care