The financial sector is traditionally under-taxed relative to the rest of the economy, so it is ideally suited as a source of taxes that can be used for global health, according to this brief. Taxes on the sector are also predominantly progressive, falling on the richest institutions and individuals. Harm Reduction International (HRI) proposes a financial transaction tax (FTT) that collects a tiny percentage (between 0.5% and 0.005%) of the value of each financial product that is traded. An average tax of just 0.05% on transactions (such as bond and share sales) could raise as much as US$409 billion a year, HRI notes, significant funding for disease responses and health system strengthening in poorer countries. HRI cautions that the FTT would be in addition to - not instead of - government commitments to overseas development assistance, so it could help bridge the resource gap that currently exists to achieve the Millennium Development Goals.
Resource allocation and health financing
Low-income countries bear over 60% of the HIV disease burden, but ActionAid argue that their total annual resources for HIV went down from 2009 to 2010. This raises a gap between resources available and needed. To close this gap by 2015, UNAIDS estimate that the international community needs to raise an additional US$6 billion annually, with a parallel increase in commitments for the period 2011-2020. Proposed potential sources of funding include innovative financing mechanisms, indirect taxation (airline tickets, mobile phone usage, exchange rate transactions), front-loading mechanisms (IFF-Im) and advance market commitments. The author urges pharmaceutical companies to enter into negotiations with the Patented Medicines Pool and to ensure that the geographic scope of these licensing agreements includes low- and middle-income countries.
From 9 to 13 July 2011, members of the Future Health Systems consortium gathered in Toronto, Canada, to participate in the 8th World Congress on Health Economics (iHEA 2011). Following a keynote address that considered the risks of a polarised debate between private or public health care, a presentation considered the future of working with health markets. The focus of the Congress was how to deliver quality health services. Participants argued that ensuring quality in inequitable contexts requires the skillful combination of commodities with knowledge. With this in mind, two panels were convened to look at how both supply side and demand side factors can be altered to improve quality of health care, in terms of both ethics and economics.
In the run-up to the fourth High-level Forum on Aid Effectiveness in Busan, South Korea, in November 2011, analysts are warning that aid measurements cannot be "dumbed down", particularly in fragile states. The UK Overseas Development Institute (ODI) has condemned the much-praised British campaign, Make Poverty History, which suggests that all that is required to solve poverty is for rich nations to give money to poor ones. In contrast, the ODI argued that development processes tend to be complex and time-consuming, especially in fragile states and states emerging from conflict. While politicians, press and voters in donor countries often demand greater transparency and less corruption as part of their aid effectiveness criteria, citizens in recipient countries may prioritise other issues like job creation or better health services. This gap in priorities needs to be addressed, the ODI concludes. The World Bank said the Busan meeting should present new funding opportunities, as increasingly important `non-traditional' development funders, such as China, India and the Arab states, will be present, and they will demand effectiveness criteria that are different from those of traditional external funders like the European Union and the United States.
According to AFRODAD, tax revenues are, on average, lower in developing countries than in rich countries; the average revenue in African countries was approximately 15% of GDP in 2008. Hence the argument that if developing countries were able to collect sufficient tax revenues, they might be able to increase their independence, the provision of social protection, infrastructure and basic services such as education and health care which are crucial for development. The two reports on Mozambique and Zimbabwe reveal that mobilising domestic resources as a means to financing development has become an important development issue, a shift from the past emphasis on financing development from aid and external borrowing. For a long time mobilising domestic revenue has been neglected, despite being a better long-term option, AFRODAD argues. The reasons for this included the inherent pessimism about raising revenue, a prevalent ‘small-state’ ideology and a preference for foreign aid-led solutions. AFRODAD proposes that progressive taxation should play an important role in shaping the distribution of benefits from higher-income citizens to those most in need in a country. The reports also examine the various complexities surrounding taxation as a development finance mechanism in the two country cases including the current tax framework, the amount and extent of tax evasion and more specifically tax incentives and governance in various sectors of the economy. They conclude with policy and institutional recommendations to the governments of Mozambique and Zimbabwe – and civil society – to refine their tax systems.
In this study, researchers analysed Global Fund grant data from 122 recipient countries as an initial exploration into how well these grants are performing in fragile states as compared to other countries. Since 2002, the Global Fund has invested nearly US$ 5 billion in 41 fragile states, and most grants have been assessed as performing well, the researchers found. Nonetheless, statistically significant differences in performance exist between fragile states and other countries, which were further pronounced in states with humanitarian crises. This indicates that further investigation of this issue is warranted: variations in performance may be unavoidable given the complexities of health governance in fragile states, but may also have implications for how the Global Fund and others provide aid. For example, faster aid disbursements might allow for a better response to rapidly changing contexts, and there may need to be more of a focus on building capacity and strengthening health governance in these countries.
South Africa’s provincial health departments have dramatically improved their financial management, according to Treasury officials. The nine departments collectively under-spent by US$380 m. in 2010, reversing the trend which saw them run into the red to the tune of $350 m. in the fiscal year 2009-10. The provinces had a combined health budget of $14.7 bn in 2010. This reduction reduces pressure on the Treasury to bail out cash-strapped provinces, a measure it has been loathe to consider for fear of sending the wrong message to provinces that have failed to manage their resources. However, these improvements can mask overspending on some areas at the expense of under- spending on others. The Treasury’s figures show provincial health departments collectively overspent on personnel budgets, but under-spent on capital assets and goods and services in 2010. This created the risk that staff costs might be crowding out expenditure in other critical areas, says the Treasury. It is calling on the government to look carefully at the reasons for underspending in each province, and ensuring that departments are aiming for savings such as negotiating cheaper medicines or more competitively priced tenders.
The authors of this paper reviewed aid to health and borrowing from the International Monetary Fund (IMF) between 1996 and 2006. They found that, on average, for each US$1 of development assistance for health, only about $0.37 is added to the health system. In their comparison of IMF-borrowing versus non-IMF-borrowing countries, non-borrowers add about $0.45 whereas borrowers add less than $0.01 to the health system. Health system spending grew at about half the speed when countries were exposed to the IMF than when they were not.
Held in Istanbul, Turkey on 9-13 May 2011, a United Nations summit to assist least-developed countries (LDCs) ended with new pledges, but the results were disappointing, according to this article. The Istanbul Programme of Action, adopted by the Conference, merely states that those countries already providing more than 0.20% of their gross national product (GNP) as aid to LDCs will continue to do so; those which have met the 0.15% target will undertake to reach 0.20%; and others which have committed themselves to the 0.15% target will either achieve the target by 2015 or try their best to do so. This weak statement with its loopholes was rebuked by the civil society groups attending the Conference. The author of this article notes that the Programme of Action seems to contain more commitments by LDCs to take their own actions than commitments by rich countries to assist them, which is a reversal from previous LDC conferences.
The United Nations Children's Fund has publicly listed for the first time the price it pays for vaccines. The decision - which immediately revealed wide disparities in what vaccine makers charge - could lead to drastic cuts in prices for vaccines that save millions of children's lives. UNICEF paid US$747 million for vaccines in 2010, buying over two billion doses for 58% of the world's children. Shanelle Hall, director of UNICEF's supply division and the driving force behind the new transparency policy, said she hoped to extend it to other goods that the organisation buys, including mosquito nets, diagnostic kits, essential medicines and ready-to-eat foods for starving children. Newer procurement agencies like the Global Fund to Fight AIDS, Tuberculosis and Malaria routinely reveal what they pay for drugs. But vaccines have been largely exempt because UNICEF has avoided confrontation with its suppliers, posting only the average prices it pays; and external funders had not demanded more details. Doctors Without Borders have commented that when external funders see the differentials they will insist on procurement at better prices.