Domestic health financing
in sub-Saharan Africa
Nouria Brikci
Senior Policy and Advocacy Adviser
Save the Children UK
Structure of the day
 Some theory and sharing of experiences (session 1)
 Some feasibility discussion of financing reforms in SSA
(session 2)
 Case study of Tanzania (session 3)
 Group work: role play (session 4)
Structure of presentation
Some background definitions
2. Why health financing matters in general and for health
governance particularly
3. Outline of each financing mechanisms - pros and cons
4. Conclusion
1.
Objectives
 Participants get broad understanding of health financing
theory and how relates to health governance
 Participants are able to understand and analyse health
financing debates in their countries/ work
 Participants share experiences/ problems from their own
contexts
1. Definitions
Universal coverage: achieving universal coverage means:
 Providing all people with access to needed services of sufficient quality to be
effective
 Ensure that use of those services does not expose user to financial hardship
Health financing
• Revenue collection: way money is raised to pay health systems costs
• Pooling of resources: accumulation and management of financial resources to
ensure that financial risk is borne by all pool members
• Purchasing of services: process of paying for health services
Principle key to governance: Equity
 horizontal equity, i.e. equal treatment of equals (thus equal expenditure,
utilisation or access for equal need, equal health outcomes)
 vertical equity, i.e. unequals being treated differently according to the same
criteria (thus unequal treatment for unequal need or unequal payment for those
with unequal incomes).
2. Why health financing matters
 An essential WHO health system’s pillar
 Relevance to health governance :
 Equity and well being central - universal coverage
 Tool for participation and reaching best interest of population
 Link with transparency/ accountability
 Should allow responsiveness
3. Various health financing
mechanisms
Private
Public
User charges
Social Health Insurance (SHI)
Community Based Health
Insurance (CBHI)
Taxation (direct, indirect,
general, earmarked)
Private Health Insurance (PHI)
Medical Savings Accounts (MSAs)
Informal payments
Mixed methods
User fees/ charges
Pros
–
–
–
–
Raise revenue for health
Reduce frivolous demand
Cost containment
Exemption mechanisms can protect vulnerable
Cons
– Limited revenue raised
– Constrains necessary demand - Frivolous demand not an issue in poor
contexts
– Very regressive – push people into poverty or debt
– Exemption mechanisms do not work
– Discourage early care seeking
Consensus: need to remove fees – how and what to replace
them with?
The Sudden and Sustained Impact of Abolishing User Fees
Total Monthly Outpatient Attendances in Kisoro District 1998-2007
60000
Utilisation Rate
1.6 visits per
person per year
50000
40000
User fees abolished
30000
20000
200% increase
10000
0
Jan
98
Jan
99
Jan
00
Jan
01
Jan
02
Outpatient attendances
Jan
03
Jan
04
Jan
05
Jan
06
12 month moving average
Jan
07
Source: MoH SL, six month review, unpublished report
User fees removal in SSA
Sénégal 2006 - Free
deliveries
Sierra Leone April 2010- Free care for
pregnant and lactating women and children
under five
All services free - Libéria february 2007
Free care for C Sections and under fives –
Sudan feb 2008
Uganda March 2001 : all services free
Tanzanie 1993 – free services for
under fives and maternity
Niger 2006 – free services for under fives and
pregnant women
Kenya October 2007 – free deliveries
Ghana May 2008 - free for under fives and
pregnant women
Madagascar 2008 – free deliveries
Burundi Aug 2006 – free for under fives
and deliveries
Zambie april 2006 – free in rural areas
Malawi – remained free
Lesotho January 2008 – free primary care
South Africa – free primary care
Zimbabwe Aug 2010 – free for pregnant women
How to remove user fees
1.
Initial situational analysis



Evaluation of user fee rates
Success of exemption policies
How revenues used
Impact of revenue foregone at health centre level
3. Additional needs in terms of drugs and HRH
4. Where additional funds will come from
5. Communication
2.
McPake B, Brikci N, et al (forthcoming), Removal of user fees - learning from international
experience, Health Policy and Planning 2011
Community-Based Health Insurance
“any scheme managed and operated by an organization, other than a
government or private for-profit company, that provides risk pooling to cover
all or part of the costs of health care services” – usually voluntary
Pros
– potential ability to collect revenue
– pool funds
– reach population groups that market based health financing
arrangements do not, such as population in the informal sector and
socially excluded groups
Cons
–
–
–
–
–
14
small pool of funds/ fragmentation
Limited financial protection
Limited revenue collection
Poorest excluded
Difficult to transform into national level system
Private Health Insurance
Limited role in low-income countries
Pros
– enable the healthcare of the relatively affluent to be self-financed,
– free up public resources
– encourage innovation and efficiency
Cons
– discriminates in favour of healthy and young adults who use little care
– lead to market segmentation, cream skimming and exclusion of vulnerable
groups (such as the poor, ill and elderly)
– creates a two-tier health system, where those with private health insurance can
access better quality services.
– When subsidised by the state, it can prove to be very expensive for the
government.
15
Social Health Insurance
Definition: legally mandatory to obtain HI with a designated (statutory) 3rd
party payer through contributions or premiums not related to risk that are
kept separate from other legally mandated taxes or contributions
Pros
• Relate initial payment to income rather than risk,
• Increase financial accessibility
• Potentially large risk pooling ie subsidisation/ redistribution
• Increase transparency - politically acceptable
Cons
• Tax on payroll: can increase overall production cost
• Focuses on formal sector
• Can create two tier health system
• Tends to exclude those in greatest need
• Feasibility issues in SSA
16
Tax financed systems
General pros
• Payment related to income
• Progressive
• Potentially very large risk pool
• Still largely untapped in SSA
General cons
 Feasibility issues: administrative capacity, tax avoidance
 Lack of transparency
General or hypothecated tax?
General taxes:
Pros
• Draws on broad revenue base
• Allows trade-offs between health care and other areas of public expenditure
Cons
• Lack of transparency
• Linked to economic growth
• Feasibility issues: administrative capacity
General or hypothecated tax?
Hypothecated taxes:
Advantages
• Ensures stable and increased revenue back
• More transparent hence decreases resistance to taxation
• Separates health from competing national priorities
• Improved accountability
• Less susceptible to political manipulation
Disadvantages
• Hypothecation could be solely cosmetic
• Too dependant on economic cycles
• Can lead to rigidity in budgetary system where expenditures are linked to revenue
generated and not to policy decisions
• May be to advantage of powerful pressure groups
Direct or indirect tax?
• Direct taxes on individuals, HH and firms and collected by government
• Indirect taxes on transactions and commodities
Direct taxes
Advantages:
• Usually progressive
• Administratively simple when records of income etc exists
Disadvantages:
• if informal market is large then need strong institutional capacity
• can create horizontal inequity:
– When income tax rates vary geographically
– When some form of income are exempt from income tax
– When some forms of expenditure are tax deductible
Direct or indirect tax?
Indirect taxes
Advantages:
• highly visible
• can promote heath if tax on health damaging goods
Disadvantages:
• Indirect taxes are overall regressive as related to consumption not overall
income. In particular:
– People with higher income save more and savings are not subject to indirect
taxes
– People with lower income spend proportionately more of their income on
heavily taxed goods (ie food)
– Many indirect taxes are set as lump-sum amounts (for example vehicle licenses)
Tax Financed Systems
 Not politically acceptable? Hypothecated tax
 Large informal sector? Example of Ghana
 Poor economic growth? Tax other sectors such as corporations
 Lack of admin capacity? Regressive tax rates
22
Conclusion
 Health financing key to governance
 Health financing sits within health system
 No perfect answer
 Universal coverage/ equity
 User fees to be removed
 CBHI limited scope/ success
 Public financing mechanisms best in principle
Thank you ...and some literature

World Health Report (2010), Health systems financing – the path to universal coverage, available at
www.who.int

McIntyre D, Gilson L, Mutyambizi V (2005) Promoting equitable healthcare financing in the African context:
current challenges and future prospects, Equinet Discussion Paper Number 27, October 2005, available on
http://www.equinetafrica.org/bibl/docs/DIS27fin.pdf

Mills A (2007), Strategies to achieve universal coverage: are there lessons from middle income countries?,
World Health Organisation, available on
http://www.who.int/social_determinants/resources/csdh_media/universal_coverage_2007_en.pdf

Di john J (2006), The Political Economy of Taxation and Tax Reform in Developing Countries, Research
Paper No. 2006/74, UNU World Institute for Development Economics Research (UNU-WIDER), available
on http://62.237.131.23/publications/rps/rps2006/rp2006-74.pdf

Tuan Minh Le, Blanca Moreno-Dodson and Jeep Ojchaichaninthorn(2008), Expanding Taxable Capacity and
Reaching Revenue Potential: Cross-Country Analysis, Policy Research Working Paper 4559, World Bank,
available on http://ideas.repec.org/p/wbk/wbrwps/4559.html

SCUK (2008) Freeing up healthcare – a guide to removing user fees, available at
www.savethechildren.org.uk

Carrin G and James C (2005) Social health insurance: key factors affecting the transition towards universal
coverage, International Social Security Association, Vol 58 (1): 45-64, available on
http://www.who.int/health_financing/issues/shi_key_factors.pdf
Ministry of
Health
Ministry of
Finance/ IMF
Poor
population
Health workers
Kabanda Obed
Peter Nyakubega
Denis Bakomeza
Bertha A Matiya
Celestine Barigye
Michelle
Ntukanyagwe
Henry T Kayondo
Alex Muhereza
Mukhtar Bulale
Aua Bale
Anna Kilala
Anne Musuva
Godknows Giya
Okello Ayen
Daniel
Grace Malera
Fathia Nour
John Wainaina
Kenneth
Angela Kamakila
Betigel
Workalemahu
Gordon
Workalemahu
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Domestic Health Financing in Sub-Saharan Africa