Fair and Sustainable Health Financing Dick Jonsson Department of Economics University of Zambia Presentation at the HEPNet Workshop on Social Health Insurance May 2007 Cape Town

1. African countries have requested WHO to provide support to fair and sustainable health financing and to identify the approaches most suited to the context of the countries of the African Region 2. At the WHO 55 Regional Committee meeting for Africa in Maputo 2005, Ministers of Health and Development Partners discussed Fair and Sustainable Health Financing Background

1. The African countries are facing huge excess premature mortality, low life expectancy and most of the Health MDG targets are not met 2. 80% of the 11 million deaths per year that occur in Africa results from preventable diseases 3. HIV/AIDS, lower respiratory tract infection, malaria, diarrhoeal diseases and maternal and prenatal conditions accounts for 54% of the deaths 4. This heavy burdens of disease have contributed significantly to Africa’s chronically poor economic performance and poverty Health Challenges

1. More than 50 percent of the countries in the African region are severely indebted 2. Big informal sector and high unemployment 3. High levels of poverty and inequitable distribution of income; the human poverty index is 40% 4. 44% of population are living on less than one USD per day Socio-Economic Context - Poverty

1. 40% of the population lack access to safe drinking water 2. 40% of adults in the region are illiterate 3. Primary school enrolment is 63% and secondary school enrolment is 21% 4. 47% of the population in the region lack access to adequate sanitation facilities Water, Education and Sanitation

1. African countries spend in average 5.7% of their GDP on health, (same as in 1995, 8.2% for all countries worldwide) countries (76% of all) spend less than USD 34 per capita, regarded as the minimum for providing an essential health care package 3. The proportion of governmental health spending of total government spending is 8% countries (96% of all) spend less than 15% (Abuja benchmark) of national budgets on health Total Health Expenditure

1. Private health expenditure amounts to be 56% of total health expenditure (2 times more than in Europe) 2. The health systems of most African countries depend largely on household’s direct out-of-pocket payments; averaged 28% of total health spending 3. Government spending on health is 44% of the total health expenditure 4. The poorest and most indebted countries rely heavily on external resources; 28% of total governmental health expenditures (4% in richer countries) Private/Public Health Expenditure

Prepayments countries in the region (35% of all) are using some type of pre paid plans 2. Few countries in the region have introduced social health insurance schemes; corresponding to 3% of the total health expenditure 3. Several countries in the region have been implementing community health insurance schemes and some medical savings accounts

1. Failure of establishing cost recovery safety net mechanisms in protecting the poor net mechanisms in protecting the poor 2. Lack of financial resources to produce good health for all health for all 3. Low income countries have a small revenue base to generate domestic resources base to generate domestic resources 4. Inefficient use of available health resources 5. Lack of human resources is a major bottleneck in achieving efficient health care bottleneck in achieving efficient health care Health Financing Challenges

6. High turnover of health staff, mainly due to poor financial incentives poor financial incentives 7. Weak management capacity to provide essential and quality health care services essential and quality health care services 8. Limited technical capacity to manage complex health financing and equity issues health financing and equity issues 9. Weak monitoring and analytical capacity and evidence not being used in health policy evidence not being used in health policy making and management making and management Health Financing Challenges

Stewardship Oversight Financing Collecting, Pooling, Purchasing FUNCTIONS OUTCOMES Health Fair financing Responsiveness People’s non-medical expectations Resources Investment and training Delivering services Provision HEALTH SYSTEM FRAMEWORK

GDP Tax Systems Labor Market External Aid Natural Resource Revenues resource base Population Collection Pooling payments Service providers Income Region Demographics Economic Activity Health Risk Out-of-pocket Co-payments Voluntary Prepayment Mandatory Prepayment Indir Taxes Direct Taxes Private Insurance Companies NGOs Public Insurance Agencies Centrl Government Local Governments Fee for Service Capitation Budgeting Salaries Prospective Retrospective Professionals Public/private facilities NGOs Hospitals Districts Health Financing Functions Purchasing Purchasing/

Health Financing Instruments Health Financing Instruments 1. General tax revenue/earmarked taxes 2. User fees (cost-sharing/cost-recovery) 3. Health insurance - Social - Community - Community - Private 4. Medical savings accounts 5. Donor funds

Fair and Sustainable Health Financing 1.Financial protection - Reduce the risk that households will face catastrophic health expenditures catastrophic health expenditures - Cross subsidisation of the poor and vulnerable by healthy and wealthy sectors vulnerable by healthy and wealthy sectors of society of society - Minimize large out-of-pocket spending on health, such as user fees health, such as user fees - Introduce or strengthen prepaid plans such as health insurance and publicly subsidised as health insurance and publicly subsidised services services

Fair and Sustainable Health Financing Fair and Sustainable Health Financing 2. Improve equity and efficiency in allocation, access to and utilization of existing health care resources 3.Increase external and domestic funding to benefit the poor - Mobilize domestic resources by using efficient revenue collection methods efficient revenue collection methods 4.Optimise the use of different financing sources and payments mechanisms to create balanced incentives for health providers with regard to equity, efficiency, productivity and quality of health care delivery

Recognize the importance of the country's: 1. Health situation and epidemiology 2. Structure and capacity of the health system 3. Macroeconomic constraints 4. Socioeconomic conditions 5. Cultural values 6. Political situation Contextual Approach

Health financing strategies and action plans to be developed with reference to: 1. National Health Policies and Strategies 2. Millennium Development Goals (MDGs) 3. Poverty Reduction Strategy Paper (PRSP) frameworks 4. Collaboration between governments and development partners, guided by the Paris Declaration of 2005 of Alignment and Harmonization, e.g. effectiveness, division of labour, use of SWAps Integration - Interaction

1. Analysis of current levels of health spending, sources and the use of those sources (NHA data) 2. Economic viability analyses of various financing options 3. Health policy analysis 4. Legal analysis 5. Socio-political environment analysis 6. Training and research Use of Evidence Based Information

1. High disease burden and high levels of poverty poverty 2. Huge informal sector, high unemployment and narrow tax base and narrow tax base 3. Lack of human resources and management capacity in health care capacity in health care 4. Limited analytical capacity in monitoring and evaluation evaluation 5. Limited evidence based data available for use in health policy and management in health policy and management Implementation Constraints Implementation Constraints

1. Strong political commitment 2. Acceptability to clients, professionals, politicians, collaboration partners and politicians, collaboration partners and the general public the general public 3. Proper management, monitoring and evaluation evaluation Enabling Factors in Implementation

4. Good governance, transparency and accountability accountability 5. Active partnership, coordination and collaboration between governments, collaboration between governments, development partners, training and development partners, training and research institutions research institutions 6. Adequate financial and technical support Enabling Factors in Implementation

Thank you!