Resource allocation and health financing

Around one billion people receive conditional cash transfers today, which have been praised as the magic bullet for poverty eradication. Such programmes are being implemented in Latin America and Africa. But they raise numerous ethical questions Bodies of evidence have shown that Conditional Cash Transfers (CCTs), as a form of social protection, can reduce inequality and poverty. Conditional Cash Transfers are payments made to poor households on the condition that they comply with a set of requirements and invest in their children’s human capital. CCT programmes have led to an uptake in health services, health outcomes and nutritional status of children as well as school enrolment and attendance. This reflexive note discusses development ethics by using Conditional Cash Transfers as a case study. It questions whether CCT prioritise human dignity by giving an overview of the methodology and underlying principles of CCT programmes in alleviating poverty and then analysing them in the light of ethics.

The Budget and Expenditure Monitoring Forum (BEMF) in South Africa hosted a two-day workshop before the Minister of Finance Pravin Gordhan tabled the 2013 Medium Term Budget Policy Statement in Parliament. Under the theme “Reflections on the Medium Term Budget Policy Statement : How Do We Know If There is Enough Money to Provide For Delivery of Services?” numerous civil society organisations and representatives from organised labour, Parliament, the Auditor General’s office and academia came together to develop a deeper understanding of Government’s future medium term spending plans for 2014 – 2016. The workshop was opened by a presentation on what the National Development Plan (NDP) envisions for public service delivery and the implications of the NDP goals for the allocation of resources. An overview of South Africa’s macro-economic policy was provided illustrating the political choices made by Government to raise money for the delivery of services while promoting economic growth and curbing public debt. The workshop then turned to an assessment of the adequacy of the Education and Health budgets and analysis of the Social Development budgets for funding of Children’s Act services. The workshop also provided participants with an opportunity to be updated on the role of the Parliamentary Budget Office and the critical role that Parliament can and should be playing in exercising oversight of the Executive’s budget policy proposals. On the last day of the workshop participants were given an opportunity to hear about various budget and expenditure monitoring methodologies ranging from social audits to citizen journalism. A 2014 steering committee was established to guide the activities of the forum into 2014.The presentations given at the meeting are provided in the website.

Kenya has been considering introducing a national health insurance scheme (NHIS) since 2004. This study contributes to this process by exploring through a cross sectional survey communities’ understanding and perceptions of health insurance and their preferred designs features. Kenyans should understand the implications of health financing reforms and their preferred design features considered to ensure acceptability and sustainability. About half of the household survey respondents had at least one member in a health insurance scheme. There was high awareness of health insurance schemes but limited knowledge of how health insurance functions as well as understanding of key concepts related to income and risk cross-subsidization. Wide dissatisfaction with the public health system was reported. However, the government was the most preferred and trusted agency for collecting revenue as part of a NHIS. People preferred a comprehensive benefit package that included inpatient and outpatient care with no co-payments. Affordability of premiums, timing of contributions and the extent to which population needs would be met under a contributory scheme were major issues of concern for a NHIS design. Possibilities of funding health care through tax instead of NHIS were raised and preferred by the majority.

This paper is focused on the question: why do the governments of low income countries not raise more tax revenues? Two different but complementary approaches are used to answer it. The first approach is comparisons: among countries today, and within countries over time. This approach tends to generate relatively conservative answers to the central question. It leads to an emphasis on the ‘sticky’ nature of the taxation. For any individual country in ‘normal times’ – i.e. excluding situations of war, major internal conflict, the collapse or rapid reconstruction of state power - revenue collections, measured as a proportion of GDP, do not change much from year to year. This is partly because effective taxation systems require a great deal of coordination and cooperation between revenue agencies and other organisations, both inside and outside the public sector. It is hard quickly to improve the effectiveness of a complex organisational network. The ‘stickiness’ of tax collections also reflects the fact that the overall tax take – i.e. the proportion of GDP raised as public revenue – is to a significant degree determined by the structure of national economies. For logistical reasons, it is much easier to raise revenue from economies (a) that are high income, urban and non-agricultural and (b) where the ratio of international trade to GDP is high. The government of the average low income country raises less than 20 per cent of GDP in revenue. The author argues that this weakens the ability of such governments to aim to match OECD tax takes of 30-45 per cent of GDP.