In this report, the World Health Organization maps out what countries can do to modify their financing systems so they can move more quickly towards the goal of universal health coverage and sustain the gains that have been achieved. The report builds on new research and lessons learnt from country experience. It provides an action agenda for countries at all stages of development and proposes ways that the international community can better support efforts in low income countries to achieve universal coverage and improve health outcomes. To ensure universal coverage, countries must raise sufficient funds, reduce the reliance on direct payments to finance services, and improve efficiency and equity. The report proposes three ways for governments to raise money: increase the efficiency of revenue collection, re-prioritise government budgets and put innovative financing mechanisms in place.
Resource allocation and health financing
The deputy speaker of Uganda’s Parliament, Rebecca Kadaga, has accused finance ministers in Africa of being insensitive by failing to prioritise the health sector during allocation of funds. She accused finance ministers of being unaware of the realities of everyday health care. She recommended that the ministers should be invited to conferences like the regional meeting of the Southern and Eastern Africa Parliamentary Alliance of Committees on Health near Kampala, where she was speaking. Kadaga said Uganda had registered progress in various sectors of development, including education, women’s empowerment and HIV and AIDS, but women and infant health had lagged behind. She attributed this to the country’s ‘weak health system, as well as inadequate human resources for health, especially reproductive health’. The reproductive health and family planning services, Kadaga said, remain mainly urban-based yet most women live in rural areas. Kadaga also decried the high population growth rate in Africa, saying it was a major challenge to the Governments' efforts to reduce poverty.
Direct facility funding (DFF) links facility funding levels to general indicators of facility size and workload rather than specific output targets. To reduce user fees, DFF was piloted in Coast Province, Kenya, with health facility committees (HFCs) responsible for managing the funds. This study evaluated the implementation and perceived impact 2.5 years after DFF introduction. Quantitative data collection at 30 public health centres and dispensaries included a structured interview with the staff member in-charge, record reviews and exit interviews. In-depth interviews were also conducted with the in-charge and HFC members at 12 facilities, and with district staff and other stakeholders. DFF procedures were well established and it made an important contribution to facility cash income, accounting for 47% in health centres and 62% in dispensaries. DFF was perceived to have a highly positive impact through funding support staff such as cleaners and patient attendants, outreach activities, renovations, patient referrals and increasing HFC activity. A number of problems were identified, such as inadequate HFC training, and lack of DFF documentation at facility level. Charging user fees above those specified in the national policy remained common, and understanding of DFF among the broader community was very limited. The study concludes that relatively small increases in funding may significantly affect facility performance when the funds are managed at the periphery. Kenya plans to scale up DFF nationwide and the authors indicate this is warranted, but should include improved training and documentation, greater emphasis on community engagement, and insistence on user fee adherence.
Overall, this paper found that health care in South Africa is very ‘pro-rich’, with the richest 20% of the population receiving 36% of total benefits (despite having a ‘health need share’ of less than 10%) while the poorest 20% receive only 12.5% of the benefits (despite having a ‘health need share’ of more than 25%). The findings indicate that there is a lack of cross-subsidies in the overall health system in South Africa. Although health care financing is ‘progressive’, this is largely due to the richest groups bearing the burden of medical scheme funding. However, the richest groups are the exclusive beneficiaries of these funds. The study shows that benefit incidence in South Africa is inequitable and notes that, in terms of a solution, the only component of the current South African health system that could contribute to overall income and risk cross-subsidies is tax funding. However, the strongly progressive component of personal income tax is to some extent offset by the regressivity of excise taxes and fuel levies and the proportional impact of VAT. In the context of the degree of income inequalities that exist in South Africa, the paper calls for a move to a health system where South Africans contribute according to ability-to-pay and benefit according to need for health care.
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.
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.