This paper discusses the range of mechanisms to improve domestic financing that have been utilized worldwide, from which Ministries of Health and Finance can draw a context-specific toolkit for strengthening domestic financing for women’s and children’s health. While evidence exists about how mechanisms have been used in different settings, there remains limited cost-effectiveness data to help guide decision-makers in low and middle income countries on when and where such mechanisms are most effectively and efficiently deployed. Financing mechanisms must be carefully coordinated and integrated to promote universal coverage and avoid fragmentation of health systems.
Resource allocation and health financing
Promising Mechanisms to Strengthen Domestic Financing for Women’s and Children’s Health
Frost L and Pratt BA, Global Health Insights: July 2012
Report of the Dialogue on Health Financing in Africa at the 15th Ordinary Assembly of the African Union, Kampala, 24 July 2010
Africa Union: Kampala : July 2012
The dialogue found that countries challenges of high turnover of Health Ministers, shortage of human and financial resources for scaling up action, and weak health information systems. The dialogue recommended flooding health systems with low and middle level staff. The meeting called for resourcing of the Global Fund, which should also “open a window” for maternal, newborn and child health. Mobilization of more domestic resources, accountability, ownership and good coordination were reported as essential for “more money for more health”. The Assembly recommended the development and adoption of national policies, to ensure health is integrated in national development strategies and also costing of national development plans with appropriate economic and other expertise. It was concluded that national and district health accounts should be institutionalized, to track expenditures and ensure decentralization to reach to the communities. Harmonization of health initiatives by development partners was recommended to support and strengthen national plans and programmes, under national ownership and leadership.
The role of insurance in the achievement of universal coverage within a developing country context: South Africa as a case study
Van den Heever AM: BMC Public Health (Suppl 1) 12: S5, June 2012
Using South Africa as a case study, this review examines whether private health systems are susceptible to regulation and therefore able to support an extension and deepening of coverage when complementing a pre-existing publicly funded and delivered health system. The study finds that the private health system in South Africa has played an important supplementary role in achieving universal coverage throughout its history, but more especially in the post-Apartheid period. However, the quality of this role has been erratic, influenced predominantly by policy vacillation. The objective of universal coverage can be seen in two dimensions, horizontal extension and vertical deepening. Private systems play an important role in deepening coverage by mobilising revenue from income earners for health services over-and-above the horizontal extension role of public systems and related subsidies. South Africa provides an example of how this natural deepening occurs whether regulated or unregulated. It also demonstrates how poor regulation of mature private systems can severely undermine this role and diminish achievements below attainable levels of social protection. When measures to enhance risk pooling are introduced, coverage is expanded and becomes increasingly fair and sustainable. When removed, however, the system becomes less stable and fair as costs rise and people with poor health status are systematically excluded from cover.
The State of Health Financing in the African Region Discussion Paper for the Interministerial Conference: Achieving Results and Value for Money in Health
WHO Regional Office for Africa: July 2012
African States are on average far from meeting key health financing goals such as the Abuja Declaration target of allocating 15% of the government budget to health. Out-of-pocket expenditure is still higher than 40% of the total health expenditure in 20 of 45 African countries, and in 22 countries the total health expenditure does not reach even the minimal level of US$ 44 per capita defined by the High Level Task Force on Innovative International Financing for Health Systems (HLTF). Only three countries have attained the Abuja Declaration and HLTF targets. Many countries have limited capacity of raising public revenue mainly because the informal nature of their economies makes collection of tax and contributions difficult. This limits their opportunities for investing in health. The paper presents trends in health financing in African countries and calls for close collaboration between the ministries of finance and health and inter-ministerial dialogue to develop a health financing strategy that supports efforts to strengthen all the other health system dimensions to move towards universal health coverage.
Adding it up: The costs and benefits of investing in family planning and maternal and newborn health
Singh S, Darroch JE and Ashford LS: Alan Guttmacher Institute, 2010
This report indicates that family planning and maternal and newborn services fall well short of needs in developing countries, particularly in the world’s two poorest regions, South Asia and Sub-Saharan Africa. The authors argue that helping women and couples have healthy, wanted pregnancies in these regions will help achieve social and economic gains beyond the health sector. Several barriers to services were identified, such as weaknesses in health systems that need to be addressed, including insufficient capacity, weak contraceptive supply systems and poor financial management systems, as well as prejudice among providers toward unmarried, sexually active young people, or toward women who have had unsafe abortions. The authors suggest that the additional funds needed for improving services could come from a combination of domestic and international resources. Furthermore, decision makers need to recognise that changes outside the service environment (e.g. social changes) may improve demand for sexual and reproductive health care.
Aid and infrastructure financing: Emerging challenges with a focus on Africa
Addison T and Anand PB: UNU-WIDER, June 2012
The central argument of this working paper is that, given the magnitude of the investment in infrastructure that is required, especially in Africa, the role of external funding (foreign aid) in the future should be distinctly different to what it is now. While external funding will be required to continue to fill the ‘savings gap’ in some small countries and land-locked countries, in most other countries it can play a very different role in facilitating the creation of institutional mechanisms that help mobilise more funding from other sources. These include domestic revenues (which already fund a large proportion of infrastructure), investments by China and the other BRIC countries, sovereign wealth funds and infrastructure funds. There are already examples of external funding playing such a leveraging role. What is needed is to take this to a new and higher level, the authors argue. The study provides an overview of evidence on infrastructure needs and also possible magnitudes of flows from different sources for investment in infrastructure.
BRIC approaches to development financing and their implications for LICs
Mwase N and Yang Y: GREAT Insights 1(4): 6, June 2012
This article considers the new players in development financing, namely Brazil, Russia, India and China (BRIC). Unlike external funding (aid) from traditional Western funders, BRIC financing (excluding Russia) focuses on mutual benefits without attachment of policy conditionality. Despite the clear advantage for low-income countries (LICs) that are receiving this funding, the authors caution that governments of these LICs will still need to ensure they get high returns for BRIC-financed projects through sound public investment management. While the scaling up of public investment associated with most BRIC financing is likely to have large positive growth effects, it is critical that LICs align BRIC-financed projects with national development priorities. To help ensure transparency and governance, improvements in data are needed regarding the size and terms of financing flows, the structure and conditions of packaged deals, as well as the rights of concessions for natural resources. Safeguarding debt sustainability will also be key, the authors argue. The final challenge will be to deepen project links to the local economy. LICs and BRICs could work together to build incentives, as part of a total package for development financing, to encourage local employment, foster skills development and improve technology transfer.
How Africa can raise money through diaspora bonds
Gumede W, Monyae D and Motshidi K: Pambazuka News 589, 13 June 2012
According to this article, Africa needs to innovatively diversify the way in which it raises finances for development, arguing that diaspora bonds are one way of doing this. World Bank and International Monetary Fund figures have put remittances from Africans abroad to the continent at between US$25 billion and US$34 billion a year. Unrecorded informal flows of remittances were most probably at least a third of this amount. The authors recommend that Africa should leverage this African diaspora money more aggressively and innovatively for development. The idea of issuing diaspora bonds should be considered as a viable alternative to raise finance for Africa’s development. Some of these remittances from Africans abroad could be channeled into buying such diaspora bonds, which can be specifically used to finance Africa’s development in terms of infrastructure or health. Diaspora bonds are long-term sources of finance and therefore less volatile and they may also allow Africa to circumvent the conditionalities that accompany development and investment finance from both old industrial and new emerging powers. However, poor governance and lack of democracy in some African governments could mean potential African diaspora investors may be wary. The article considers India and Israel, two countries where diaspora bonds have been used successfully as model examples of how Africa could proceed.
Affordability of emergency obstetric and neonatal care at public hospitals in Madagascar
Honda A, Randaoharison P and Matsui M: Reproductive Health Matters 19(37):10-20, May 2011
This study measured out-of-pocket costs for caesarean section and neonatal care at an urban tertiary public hospital in Madagascar, assessed affordability in relation to household expenditure and investigated where families found the money to cover these costs. Data were collected for 103 women and 73 newborns at the Centre Hospitalier Universitaire de Mahajanga in the Boeny region of Madagascar between September 2007 and January 2008. Out-of-pocket costs for caesarean section were catastrophic for middle and lower socio-economic households, and treatment for neonatal complications also created a big financial burden, with geographical and other financial barriers further limiting access to hospital care. This study identified 12 possible cases where the mother required an emergency caesarean section and her newborn required emergency care, placing a double burden on the household. In an effort to make emergency obstetric and neonatal care affordable and available to all, well-designed financial risk protection mechanisms and a strong commitment by the government to mobilise resources to finance the country's health system are necessary, the authors conclude.
DRC: HIV effort needs government funding to succeed
Plus News: 4 May 2012
Many national hospitals in the Democratic Republic of Congo (DRC) are no longer accepting new HIV-positive patients for antiretroviral treatment (ART), largely due to lack of capacity and funding shortfalls. According to Medicins Sans Frontiers, urban areas are poorly covered by ART (30% for Kinshasa), but rural areas are much more severely underserved. Funding remains uncertain. A major World Bank project recently closed after six years, while UNITAID, which provides funding for paediatric and second-line antiretrovirals, will end its funding to the DRC in December 2012. The cancellation of Round 11 funding by the Global Fund to fight AIDS, Tuberculosis and Malaria is likely to worsen the situation. Réseau National d'Organisations Assises Communautaire (RNOAC), a national network of community-based organisations, has called on government to supply funding for HIV programmes instead of relying exclusively on external funding.