DELSA/GOV 3rd Health meeting - Akiko MAEDA, Cheryl CASHIN

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This presentation by Akiko MAEDA and Cheryl CASHIN was made at the 3rd Joint DELSA/GOV Health Meeting, Paris 24-25 April 2014. Find out more at www.oecd.org/gov/budgeting/3rdmeetingdelsagovnetworkfiscalsustainabilityofhealthsystems2014.htm

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DELSA/GOV 3rd Health meeting - Akiko MAEDA, Cheryl CASHIN

  1. 1. The Macroeconomic and Fiscal Context for Health Financing Policy Informing the Dialogue Between Ministries of Health and Ministries of Finance in Low- and Middle-Income Countries Akiko Maeda Cheryl Cashin 3rd MEETING OF THE JOINT NETWORK ON FISCAL SUSTAINABILITY OF HEALTH SYSTEMS 24-25 April 2014 OECD Conference Centre, Paris, France 1
  2. 2. 2 World Bank Goals End Extreme Poverty by 2030 Boost shared prosperity Financial Protection No one should be impoverished due to out-of-pocket expenditures. Service Coverage All communities and individuals, especially the bottom 40%, should receive the quality health services they need through the life cycle and be protected from public health risks. Healthy Societies Promoting investments that are the foundation of health societies, e.g., water & sanitation, agriculture, education, social protection, transport, gender, environment, etc. Universal Health Coverage World Bank Goals and Universal Health Coverage
  3. 3. Health Financing and UHC Universal health coverage (UHC) requires adequate financial resources to pay for state- guaranteed health services. These resources need to be: • Pooled effectively to provide financial protection • Redistributed to maintain equity • Collected and used efficiently and equitably 3 • Out-of-pocket payments tend to be the largest revenue source in low-income countries • Government budget is a significant source of pooled revenues, and it plays a key role in leveraging policy for achieving health sector goals.
  4. 4. Key Issues for MOH-MOF Dialogue in Low and Middle Income Countries 4 Severe macroeconomic and fiscal constraints • Narrow tax base and low rate of collection • New revenue for the health sector may be substitutive Stated priorities not always reflected in budget allocations • Budget allocation does not always follow National Plans/MTEF • Rigidities in the budget Budget formation, execution and reporting process is a source of inefficiency Historical, line-item budgeting makes it difficult to match expenditure with priority services Inefficiencies in health spending coexist with the need to increase spending Scope for efficiency gains exist within the health sector, but it will take time and multi-faceted investment to realize these gains Health SpendingRevenue for Health
  5. 5. Key Issues for MOH-MOF Dialogue in Low and Middle Income Countries 5 Severe macroeconomic and fiscal constraints • Narrow tax base and low rate of collection • New revenue for the health sector may be substitutive Stated priorities not always reflected in budget allocations • Budget execution does not always follow National Plans/MTEF • Rigidities in the budget Budget formation, execution and reporting process is a source of inefficiency Supply-side / line- item budgeting makes it difficult to match expenditure with priority services Inefficiencies in health spending coexist with the need to increase spending Scope for efficiency gains exists within the health sector, but it will take time and multi-faceted investment to realize these gains Health Spending Scope for cooperation between MOH and MOF Revenue for Health
  6. 6. Ghana’s Experience 6 Ghana is a west African country with a population of ~25 million Per capita GDP = $1,150 (2010) Life expectancy = 65 years
  7. 7. Ghana’s Experience 7 Total Health Expenditure = $54/person 16% National Health Insurance Scheme 40% Ministry of Health Budget 44% Out-of-Pocket
  8. 8. Ghana’s Experience 8 0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 2009 2010 2011 2012 2013 2014 2015 ProjectedGovernmentHealthExpenditure(nominalinmillionsGhC) Improvement in revenue collection General economic growth Actual Economic growth has been robust, but improvements in government revenue collection are critical. Macroeconomic and Fiscal Context
  9. 9. Ghana’s Experience 9 Share of total government budget allocated to health has stagnated even while new earmarked revenue source added and economic growth has been strong. Health as % of total government budget 0 2 4 6 8 10 12 14 16 18 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 NHIS started Ghana achieved lower- middle income status
  10. 10. Ghana’s Experience 10 NHIS funds are transferred to extra- budgetary fund so can be spent flexibly. But often not transferred on time, causing arrears and interest charges. Rigidities in public financial management 54% 4% 38% 4% Salaries Administration Service Investment MOH line-item budget
  11. 11. Ghana’s Experience 11 Inefficiencies and unproductive cost grown - 100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 700,000,000 2005 2006 2007 2008 2009 2010 2011 VAT SSNIT Investment Income Premiums Other Grants Ghana ‘s NHIS has achieved a growing and diversified revenue base 0 100000000 200000000 300000000 400000000 500000000 600000000 700000000 2005 2006 2007 2008 2009 2010 2011 Revenue Claims But claims per member is growing faster than revenue NHIS expenditure/member is increasing > 30%/year Without increase in population coverage, benefits or utilization
  12. 12. Guidance Note on the Macroeconomic and Fiscal Context for Health Financing Policy in LMICs Objective: to inform the dialogue between Ministries of Health and Ministries of Finance in support of Universal Health Coverage. The Guidance Note: • Outlines the key components of the macroeconomic, fiscal, and public financial management context that need to be considered for an informed health financing discussion at the country level. • Is organized around 4 sets of questions to help structure the policy dialogue firmly in the context of a country’s macroeconomic and fiscal context. • Points to analytical tools that are available to assist in answering these questions for a specific country. 12
  13. 13. Guidance Note on the Macroeconomic and Fiscal Context for Health Financing Policy in LMICs Key Areas for MOH-MOF Health Financing Policy Dialogue HealthSector Revenue 1. Realistic government health spending projections given macroeconomic and fiscal constraints. 2. Realistic opportunities to re-prioritize within the budget Health Expenditure 3. Opportunities and constraints to better align health spending with health system objectives 4. Efficiency of current health expenditure patterns 13
  14. 14. Sample tool: World Bank Macro-fiscal context and health financing factsheets 14
  15. 15. THANK YOU! amaeda@worldbank.org ccashin@r4d.org 15

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