In the debate surrounding aid effectiveness in Africa, some have suggested that these countries ought to ‘wean themselves off’ aid dependency. This paper provides five strategies that African countries can employ to eliminate the need for donor funding for health. First, they can reduce economic inefficiencies. Second, they should institutionalise economic efficiency monitoring within national health management information systems with a view to implementing appropriate policy interventions to reduce wastage of scarce health systems inputs. Third, they can reprioritise public expenditures by, for example, cutting back on military spending and raising additional tax revenues by increasing the tax share to at least 15% of gross domestic product (GDP). Fourth, more private sector involvement in health development is required and, last, the fight against corruption needs to be stepped up.
Resource allocation and health financing
This paper explores the factors associated with household coping behaviours in the face of health expenditures and provides evidence for policy-makers in designing financial health-protection mechanisms. Data from the 2002–2003 World Health Survey was analysed. The paper found that many patients finance their health care by borrowing and selling assets, ranging from 23% of households in Zambia to 68% in Burkina Faso. High-income groups were less likely to borrow and sell assets, but coping mechanisms did not differ strongly among low-income quintiles. Households with higher inpatient expenses were significantly more likely to borrow or sell than those financing outpatient care or routine medical expenses, except in Burkina Faso, Namibia and Swaziland. In eight countries, the coefficient on the highest quintile of inpatient spending had a p-value below 0.01. In conclusion, the health financing systems of most African countries are too weak to protect households from health ‘shocks’, like unexpected health costs that require them to borrow or sell their assets. Formal prepayment schemes could benefit many households, and an overall social protection network could help to mitigate the long-term effects of ill health on household well-being and support poverty reduction.
Basing drug reimbursement on cost-effectiveness provides too little incentives for research and development. The reason for this is that cost-effectiveness is concerned with immediate value for money. But since the price of a drug usually declines over time, the drug might well provide value for money as seen over its entire life cycle, even though its price during patent protection is too high to warrant reimbursement according to the cost-effectiveness decision rule. This paper shows in a theoretical model that welfare could be improved if decision-makers took a longer perspective and initially allowed higher prices than immediate value for money can motivate. It also discusses the real-world relevance of applying dynamic cost-effectiveness.
High levels of out-of-pocket payments have limited the ability of people to use services in poor countries. Evidence shows that removing or reducing user fees increases utilisation, at least in the short term, while out-of-pocket payments are often made by borrowing or by selling assets, putting people into debt and restricting their long-term economic survival. An important challenge therefore is to shift away from out-of-pocket payments through the development of prepayment schemes for universal coverage but, in resource-poor settings, additional funds will be critical. Some researchers claim that it is possible for developing countries to ‘wean themselves off’ international donor funding, essentially through the better use and management of domestic resources, but others believe it’s impossible for them to finance universal access without donor funding.
This report published by Oxfam examines the role of health insurance mechanisms will close health financing gaps and benefit poor people. The mechanisms discussed in this paper are private health insurance, private for-profit micro health insurance, community-based health insurance and social health insurance. It describes those mechanisms and their success or failure to deliver health rights particularly for people living in poverty.
This paper tackles the paper by Kirigia and Diarra-Nama from the WHO Regional Office for Africa, which claims that countries in the WHO Africa Region need to ‘wean themselves off’ donor funding for health in order to meet the annual WHO target of US$40 per person required to provide universal coverage. The paper evaluated the five strategies that the Kirigia and Diarra-Nama paper proposed and dismissed all of them. It predicted their impact on eight countries and noted a reduction in military expenditure would not make a difference either, as expenditure in these countries is low. Six countries still face a huge gap between current total health expenditure and the revised target made by the Commission on Macroeconomics and Health and need more aid urgently. They can be helped through sustained international health aid, with health recognised as a human right.
This response to Kirigia and Diarra-Nama’s paper points out that they do not propose alternative strategies to enable African countries to mobilise the funds without depending solely on donor funding. Kirigia and Diarra-Nama argue that eight countries whose current military spending is above the regional average of US$ 16 per person may have scope for savings. Thirteen countries whose tax share of GDP is less than 15% have scope for raising additional revenue by improving efficiency of their tax administration systems. The amounts, however small, are not insignificant in these countries where more than 60% of the population live below the international poverty line of US$1 per person per day. The effectiveness of international aid should also be judged on the extent to which it helps recipient countries to ‘wean themselves off’ external donor funding.
There is no good reason why a country with an income of US$366 per capita cannot afford to increase its domestic health spending from US$20 to US$34. It is the value of forgone alternative benefits (as perceived through either collective decision making or unilateral decisions of political authority) that puts a limit on how much a society can spend on health, not some health expenditure-GDP ratio technical limit. Further, general lessons of experience from parts of east and south-east Asia and Latin America show that, as countries experience substantial broad-based economic and social progress, greater health funding becomes feasible. Such a situation requires time, but has been realised in these countries within about 20 to 40 years. The author believes it will take a long time to reduce the high dependency on donor aid, but Africa should aim to increase domestic resource mobilisation.
In 2005, the member states of WHO adopted a resolution to develop health financing systems to deliver universal coverage of health services by moving away from out-of-pocket payments and developing prepayment methods instead. This paper proposes a comprehensive framework, focusing on health financing rules and organisations, that countries can use to achieve universal coverage. For many countries, it will obviously take some years to achieve the goal and their responses will be determined partly by their own histories and the way their health financing systems have developed to date, as well as by social preferences relating to concepts of solidarity. The proposed framework considers fund collection, pooling and purchasing/provision separately, as well as the links between the three functions to indicate what rules need to be modified or developed and where organisational capacity should be strengthened.
About 11 million of 33 million HIV-positive people have tuberculosis (TB) and, if financially troubled nations renege on aid pledges, it would deprive the poor of life-saving treatment. New Nobel laureate and HIV co-discoverer, Francoise Barre-Sinoussi, fears that the global economic crisis could cause nations to renege on commitments to fight tuberculosis and wipe out gains made against AIDS because so many people suffer from both diseases. The world is achieving success with antiretroviral treatment for HIV, but we have an epidemic of multi-resistance to tuberculosis treatment, which is really alarming. An estimated 33 million people worldwide are infected with HIV. About 11 million of them also have tuberculosis. By suppressing the immune system, HIV leaves people susceptible to other infections, especially TB.