ECOSOC Regional Ministerial Meeting
Colombo, 16 March 2009
Domestic Financing for Health: Key Issues
by
David B Evans, Director
Department of Health Systems Financing
Health Systems and Services Cluster
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Functions and Goals of Health System
Goals / Outcomes of the system
System Building Blocks or Functions
SERVICE DELIVERY
I
N
HEALTH WORKFORCE
P
INFORMATION
U
MEDICAL PRODUCTS, VACCINES &
TECHNOLOGIES
T
LEADERSHIP/GOVERNANCE
Quality
Coverage
Responsiveness
(the way people are
treated and the
environment)
Health
S
FINANCING (COLLECTING,
POOLING AND PURCHASING)
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Efficiency
ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Fairness in financial
contribution
Three core health financing functions
Equity and Transparency
Revenue collection
Collect
sufficient funds
efficiently
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Pooling
Share costs not borne only
by people who
are ill
ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Purchasing
Buy or provide
effective health
interventions
Revenue Collection
 13 Asian countries rely heavily on external funding for health. External funding the
focus of the next Panel. These countries are more at risk of reductions in the funds for
health.
 Parts of Asia still growing relatively strongly. Govt. Expenditure on health should
continue to rise, at least proportional to GDP and General Government Expenditure.
 Exceptions:
 Countries relying on import and export taxes/duties for govt. revenue
 Where devaluation against currencies in which health imports denominated: e.g. medicines.
Even same levels of expenditure buy less.
 Parts of Asia in recession. Concern that there will be pressure to cut government
health spending, particularly where emergency IMF emergency support. Good reasons
for resisting this. Spending on health important in an economic downturn, protecting
the poor and vulnerable. Can also be an important part of a stimulus package –
increasing aggregate Demand
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Revenue Collection - Households
 Parts of Asia still growing relatively strongly: Household income on
aggregate should continue to grow.
Some Exceptions:
 Possible reduction in remittances from abroad.
 Effective income might fall if devaluation causes prices of imports to
rise.
 Pockets of unemployed or vulnerable: e.g. those in the export sector
 Parts of Asia in recession: Effective household incomes fall.
 Impact: less private health expenditures and shift to public sector.
Important for public sector to be prepared.
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Pooling: Lack of access, financial catastrophe and
Population in millions
impoverishment due to user-charges
1,400
1,300
1,200
1,000
HH without access
to affordable and
effective health care
800
600
400
200
HH with
catastrophic hexp
150
100
HH impoverished
0
Household categories
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Pooling
 Parts of Asia still growing relatively strongly: Important to continue
the push towards prepayment and pooling of funds. Only then can
universal coverage be achieved.
 Parts of Asia in recession: Important to reinforce social protection
mechanisms for the poor and vulnerable.
 Crises sometimes offer opportunities for changes that might be
politically difficult at other times: opportunity to set in place
mechanisms that enable a more rapid movement to universal
coverage when economic growth restarts.
 Fundamental for the revitalization of Primary Health Care
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Purchasing
 Many sources of inefficiency in health e.g.
 Inappropriate mix of interventions or inputs purchased;
 Services available at inappropriate level of care;
 Waste – e.g. long length of stay; over use of medicines
 Ways providers are paid are particularly important.
 Supply and demand side responses possible. Results-based financing (RBF)
receiving considerable attention these days. Demand side incentives such as
cash transfers can also improve equity.
 Important to recognize it is only one part of the requirements for a well
functioning health financing system.
 Crises again offer additional opportunities for change: e.g. move to generic
medicines. Focus on equity
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Conclusions 1: Domestic Health
Financing Needs
i.
Raise additional funds where health needs are high and
revenues insufficient
ii.
Reduce reliance on out of pocket payments where they are
high, by moving towards pre-payment and pooling
iii.
Enhance social protection by ensuring the poor and other
vulnerable groups have access to needed services, particularly
during financial and economic downturns
iv.
Improve efficiency and equity: appropriate mix of activities to
fund, appropriate inputs in production of health services,
provider payment methods and other incentives for efficient
service provision and use, and financial, contractual and other
relationships with the non-government sector
v.
Promote transparency and accountability in health financing
systems
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Conclusions 2: Grasping the Opportunity
vi. Recessions and crises offer the opportunity for bold
thinking
vii. Health expenditure can be a valuable part of a
stimulation package for countries in recession
viii. Measures to protect the poor and vulnerable are
critical. The crisis offers the chance to move more
quickly.
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Thank you
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Stages of Coverage
Universal
Coverage
* Tax-based financing
* Social health insurance
* Mix of tax - based financing and
various types of health insurance
Intermediate stages of
coverage
* Mixes of community
- enterprise-based Cooperative-and
health insurance, other private
health insurance, SHI-type
Absence of
financial protection
coverage for specific groups and
tax-based financing
* Out-of-pocket spending
for health care
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ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Expected Economic Growth 2009
IMF revised all estimates, for all regions, downwards:
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
Global Gross Domestic Product growth: 0.25%



Advanced Economies: -2.0% (first year on year negative
growth since 1945)
Central and Eastern Europe: -0.4%
Newly Industrialised Asia: -3.9%


Sub-Saharan Africa: +3.5%
Developing Asia: +5.5%
ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009
Global Growth
GDP, US$, capita, growth
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1999
2000
2001
2002
2003
2004
2005
2006
compound
AFR
0.9
-4.7
0.9
21.0
20.2
15.7
11.3
11.7
12.37
AMR
5.4
0.6
-0.2
4.3
7.0
7.8
7.0
7.3
5.62
EMR
14.6
-4.2
6.9
6.5
16.8
18.9
15.3
13.8
12.12
EUR
-5.9
0.6
9.3
21.1
16.2
7.0
7.3
16.4
12.87
SEAR
5.2
-1.3
5.5
14.9
12.8
12.3
14.3
20.2
13.00
WPR
6.5
-7.9
0.6
10.0
11.5
5.2
4.4
9.8
5.42
World
1.6
-1.9
2.9
11.1
11.3
7.1
6.7
11.4
8.02
ECOSOC Regional Ministerial Meeting, Colombo: 16th March 2009