Chris Atim, PhD Executive Director, African Health Economics and Policy Association (AfHEA) Presentation at Fifth Annual Meeting of the African Science.

Chris Atim, PhDExecutive 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

Health Financing in Africa: Challenges and Opportunities for Expanding Access to Quality Health care

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

Current paradigmCurrent 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

3

Proposed paradigmProposed 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

Abuja: Government spending on health should be at least 15% of total government spending

East Asia & Pacific: 10.1% Latin America and the Caribbean: 12.5%

Commission on Macroeconomics & Health (CMH): Estimated $34 per capita for a basic package of health service

East Asia & Pacific: $62 (current US$) Latin America and the Caribbean: $272 (current US$)

Are targets meaningful? Relevant?

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2.0

3.0

3.0

3.3

4.0

4.0

4.0

4.8

5.0

6.0

7.0

7.0

7.0

7.2

7.2

8.0

8.0

8.0

8.0

8.0

8.0

8.0

8.1

9.0

9.0

9.0

9.0

10.0

11.0

11.3

12.0

12.0

13.0

13.0

13.0

14.0

14.5

15.0

0.0 5.0 10.0 15.0 20.0

Ethiopia

Burundi

Chad

Egypt

DRC

Eq. Guinea

Nigeria

Sudan

Angola

Niger

CAR

Kenya

Burkina Faso

Djibouti

Cote d'Ivoire

Mauritius

Rwanda

Swaziland

Cape Verde

Mali

Mauritania

Togo

Tunisia

Madagascar

Malawi

Zambia

Senegal

South Africa

Mozambique

Libya

Uganda

Namibia

Tanzania

Gambia

Ghana

Sao Tome

Zimbabwe

Botswana

Percentage of national budgets allocated to health sector

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.

0 10 20 30 40 50 60

BurundiDRC

EthiopiaSierra LeoneMadagascar

LiberiaNiger

Guinea-Eritrea

TanzaniaMozambique

CARMauritania

Rw andaTogo

GambiaUgandaMalaw i

ChadKenyaGuineaNigeria

MaliBenin

Burkina FasoAngolaGhana

Zimbabw eCongo

ZambiaCôte d'Ivoire

LesothoCameroon

The CMH targetPer capita health spending, 2004

Per capita govt. expenditure on health Out-of-pocket expenditure on health Private pooled expenditure on health

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Source: WHO SISNote: 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.

The CMH Target

Few countries spend $34+

$-

$10

$20

$30

$40

$50

$60

$70

$80

Buru

ndi

DR

Congo

Eth

iopia

Eritr

ea

Lib

eria

Mala

wi

Sie

rra L

eone

Rw

anda

Madagascar

Nig

er

Uganda

Gam

bia

Mozam

biq

ue

Tanzania

CA

R

Togo

Mali

Guin

ea

Burk

ina F

aso

Ghana

Maurita

nia

Zam

bia

Kenya

Zim

babw

e

Nig

eria

Chad

Benin

Lesoth

o

Senegal

Cam

ero

on

Côte

d'Ivoire

Angola

Congo

<$250 $250-$499 $500-$999 $1,000+

country, sorted by GDP per capita

healt

h e

xp

en

dit

ure

(U

S$, 2004)

public spending private spending Abuja shortfall in public spending

CMH target $34

Source: World Bank, WDI 2007; author’s calculations.

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

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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

9Sources: Disease Control Priorities Project, 2007; and African Development Bank, 2002.

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.

10%18% 25% 32%

19%

40% 30%

42% 25%

28%

50% 52%33%

42%53%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998 2000 2002 2003 2006

Public Private DonorSource: Rwanda NHA 1998-2006

Health financing in Sub-Saharan AfricaRegional averages, 2004

Indicator Current level Target level

Health spending as a percent of GDP

4.7% >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

12Source: WHO SIS; World Bank World Development Indicators 2007 (2004 data).

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

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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

Fall in commodity prices due to reduced demand – oil, agric produce, minerals, tourism all affected Thereby affecting Govt revenues and fiscal space for health spending

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 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

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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)

Revenue raising and risk pooling through insurance Community-based health insurance National/social health insurance schemes

Performance-based financing Innovative international financing

mechanisms

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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.

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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

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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?

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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

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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

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

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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

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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

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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

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