This paper considers the minimum resources that would be required to achieve South Africa’s proposed National Health Insurance (NHI) system and contrasts these with the costs of scaled up access to antiretroviral treatment (ART) between 2010 and 2020. The costs of ART and universal coverage (UC) were assessed through multiplying unit costs, utilisation and estimates of the population in need during each year of the planning cycle. Costs are from the provider’s perspective reflected in real 2007 prices. The study found that the annual costs of providing ART increase from US$1 billion in 2010 to US$3.6 billion in 2020. If increases in funding to public healthcare only keep pace with projected real gross domestic product (GDP) growth, then close to 30% of these resources would be required for ART by 2020. However, an increase in the public healthcare resource envelope from 3.2% to 5%-6% of GDP would be sufficient to finance both ART and other services under a universal system (if based on a largely public sector model) and the annual costs of ART would not exceed 15% of the universal health system budget.
Resource allocation and health financing
Many of the Millennium Development Goals (MDGs)are not being achieved in the world’s poorest countries, yet only five years remain until the target date. The financing of these Goals is not merely insufficient; current evidence indicates that the temporary nature of the financing, as well as challenges to coordinating its delivery and directing it to the most needy recipients, hinder achievement of the Goals in countries that may benefit most. Traditional approaches to providing development assistance for health have not been able to address both prevalent and emergent public health challenges captured in the Goals; these challenges demand sustained forms of financial redistribution through a coordinated mechanism. This paper proposes a global social health protection fund to address recurring failures in the modern aid distribution mechanism. Such a Fund could use established and effective strategies for aid delivery to mitigate many financial problems currently undermining the MDG initiative.
At the conclusion of the meeting to replenish the Global Fund to Fight AIDS, Tuberculosis and Malaria on 5 October 2010 in New York, donors fell far short of investing the US$20 billion needed to fully fund the fight against the three pandemics. Instead of the doubling of funding commitments needed to accelerate HIV, TB and malaria programme scale up, countries announced initial increases averaging approximately 25% or, in the case of some donors such as the United Kingdom, Ireland and Spain, did not pledge at all. This shortfall, unless corrected, will mean that the Global Fund will have to reject high-quality country proposals, and dramatically slow down the pace of scale up. The pledges and projections add up to $11.687 billion. Unless more commitments are made, the $8.3 billion funding shortfall will result in millions of deaths: at least 3.1 million people will die of AIDS and more than 2.9 million in need of TB treatment will not have access. On the positive side, one outcome of the meeting was the first ever multi-year commitment to the Fund from the United States, which intends to seek $4 billion for the Fund for 2011 through 2013, amounting to a 38% increase over the preceding three-year period.
This report is part of the SHIELD (Strategies for Health Insurance for Equity in Less Developed Countries) project, which aims to critically evaluate existing inequities in health care in Ghana, South Africa and Tanzania and the extent to which changes in health care financing mechanisms could address equity challenges. The first phase of SHIELD involved undertaking detailed financing incidence analyses (i.e. an evaluation of the distribution of the current health care financing burden between socio-economic groups relative to each group’s ability-to-pay) and benefit incidence analyses (i.e. an evaluation of the distribution of the benefits of using health services across socio-economic groups relative to each group’s need for health care) as a means of identifying existing health system inequities and the factors contributing to these inequities in each of the three countries. The second phase of SHIELD relates to identifying and critically evaluating options for the future development of health care financing mechanisms in relation to their potential equity impact and their feasibility and sustainability given attitudes of key stakeholders. This report focuses on aspects of this phase of work in South Africa, namely the feasibility and sustainability of alternative health financing reforms in relation to their respective resource requirements.
South Africa intends implementing major reforms in the financing of healthcare. Free market reforms in private health insurance in the late 1980s have been reversed by the new democratic government since 1994 with the re-introduction of open enrolment, community rating and minimum benefits. A system of national health insurance with income cross-subsidies, risk-adjusted payments and mandatory membership has been envisaged in policy papers since 1994. Subsequent work has seen the design of a Risk Equalisation Fund intended to operate between competing private health insurance funds. This paper outlines the South African health system and describes the risk equalisation formula that has been developed. The risk factors are age, gender, maternity events, numbers with certain chronic diseases and numbers with multiple chronic diseases. The Risk Equalisation Fund has been operating in shadow mode since 2005 with data being collected but no money changing hands. The South African experience of risk equalisation is of wider interest as it demonstrates an attempt to introduce more solidarity into a small but highly competitive private insurance market. The measures taken to combat over-reporting of chronic disease should be useful for countries or funders considering adding chronic disease to their risk equalisation formulae.
This brief is part of the SHIELD (Strategies for Health Insurance for Equity in Less Developed Countries) project. The brief calculates that the total resource requirements for the ‘mandatory extension of medical scheme coverage’ option (or SHI) will be considerable. Only one country in the world has spending levels as high as 13% of GDP – the USA. The brief dismisses this option as unaffordable in the South African context, based on the fact that the burden on households that are required to join a medical scheme will be very high, with scheme contribution rates per person being twice as high as they currently are in real terms (i.e. before the effect of inflation is added). The major decision facing policy makers is therefore whether we should retain the status quo or whether the country should pursue a universal health system. The ‘universal coverage’ option would see health spending levels increasing in line with expected growth in gross domestic product (GDP), so that when fully implemented, total health care spending as a percentage of GDP would be comparable to what it currently is. The author points out that the key challenge with pursuing universal coverage is the need to allocate more public funds to the health sector, partly through increased taxes.
This brief outlines the role that social transfers have to play in providing an inclusive framework to reduce intergenerational and chronic poverty. The authors argue that the Millennium Development Goals (MDGs), in common with many development, policies and programmes, focus effort on children, young people and the ‘working-age’ poor. However, they fail to recognise and support the social, economic and caring needs and contributions of older people. The paper highlights HelpAge's call on the international community to invest in government-led social transfer schemes in order to accelerate progress to achieve the MDGs. HelpAge calls for multilateral and bilateral development agencies to commit to working in partnership with national governments and invest in the development or scaling up of long-term, sustainable social transfer schemes, disaggregated monitoring of aid budgets and national government budgets to track the impact of social transfers, and recognition by the United Nations’ MDG database of the need for age-disaggregated data to ensure the effective monitoring and evaluation of the MDGs for all age groups.
While countries such as the USA, South Africa and China debate health reforms to improve access to care while rationalising costs, Canada’s health care system has emerged as a notable option. According to this article, in the United States (US), meaningful discussion of the advantages and disadvantages of the Canadian system has been thwarted by ideological mudslinging on the part of large insurance companies seeking to preserve their ultra-profitable turf and backed by conservative political forces stirring up old fears of ‘socialised medicine’. These distractions have relegated the possibility of a ‘public option’ to the legislative dustbin, leaving tens of millions of people to face uninsurance, under-insurance, bankruptcy and unnecessary death and suffering, even after passage of the Obama health plan. While South Africa appears to experience similar legislative paralysis, there remains room for reasoned health reform debate to address issues of equity, access, and financing. This article contributes to the debate from a Canadian perspective by setting out the basic principles of Medicare (Canada’s health care system), reviewing its advantages and challenges, clarifying misunderstandings, and exploring its relevance to South Africa. It periodically refers to the US because of the similarities to the South African situation, including its health care system, which mirrors South Africa’s current position if left unchanged. The article concludes that, while Medicare is neither flawless nor a model worthy of wholesale imitation, an open discussion of Canada’s experience should be included in South Africa’s current policy and political efforts.
This paper analysed aid flows for maternal, newborn, and child health for 2007 and 2008 and updated previous estimates for 2003-2006 in the 68 priority countries in the Countdown to 2015 Initiative. The complete aid activities database of the Organisation for Economic Co-operation and Development for 2007 and 2008 was manually coded and analysed with methods that were previously developed to track overseas development assistance (ODA). The researchers analysed the degree to which external funders target their ODA to recipients with the greatest maternal and child health needs and examined trends over the six years. They found that, in 2007 and 2008, US$4.7 billion and $5.4 billion (constant 2008 US$), respectively, were disbursed in support of maternal, newborn, and child health activities in all developing countries, reflecting a 105% increase between 2003 and 2008, but no change relative to overall ODA for health, which also increased by 105%. Targeting of ODA to countries with high rates of maternal and child mortality improved over the 6-year period, although some of these countries persistently received far less ODA per head than did countries with much lower mortality rates and higher income levels. Funding from the GAVI Alliance and the Global Fund to Fight AIDS, Tuberculosis and Malaria exceeded core funding from multilateral institutions, and bilateral funding also increased substantially between 2003 and 2008, especially from the United States and the United Kingdom. The paper welcomes increases in ODA to maternal, newborn, and child health during 2003-2008 and the improved targeting of ODA to countries with greater needs. Nonetheless, these increases do not reflect increased prioritisation relative to other health areas.
Campaigners for increased health financing have welcomed the commitment by African Union member states to direct more resources to health. But the needs of the continent seem to dwarf available budgets. During the 15th Summit of the African Union heads of state in Kampala in July, African leaders committed to mobilise more resources for the health sector in addition to the allocation of 15 percent of national budgets. However, national resources are considered insufficient to meet the demand. Dr Thomas Kibua, director of health policy and systems research at the African Medical and Research Foundation (AMREF), says even if every African states were to increase allocation to the health sector to 15%, none of the three health-related millennium development goals will be achieved. States would have to increase allocation to health care to 45%, he argued, which is untenable for any country.