Subsidy and It Implication in Public Health
Authors
Prof. Mohamed Karama-KEMRI
Mr. Simon Kimani- KMTC
Ms. Viola Jepkosgey - KMTC
Mr. Francis Kariuki- KMTC
Ms. Hellen Gitau- JKUAT
Mrs. Annette Mwangi-KEMRI
Erick Machuki-MoH –Kajiado
Mika Mitoko- PATH
Introduction
 Subsidy is a form of financial assistance paid to an individual, a
business or an economic sector in order to achieve certain public
objective.
 Any monetary exchange which is not directly connected to paying
for a service can be termed as a subsidy.
Examples of subsidies
 Direct subsidy: directly giving money to people .e.g. money
given to total sanitation campaign to support people build latrines
in order to achieve open defecation free status.
 Services or indirect transfer: these are services provided by
public sector or indirect financial transfer. E.g. Construction of
community toilets to reduce open defecation or distribution of
insecticides mosquito nets to reduce malaria incidence.
Historical Perspective on Subsidy
 After independence, developing countries received donations
in kind. In health these included subsidized health equipment
mainly for diagnosis and management of illnesses.
 It was familiar to find these equipments broken due to lack of
skills to operate and maintain. It was also expensive to
maintain as the equipment was from different manufacturers
and replacements parts were difficult to procure.
 Villagers were also provided with e.g. latrine. These were
often not used due to lack of ownership
Subsidy In Relation To Primary Health Care
 Primary health care is the essential care based on practical,
scientifically sound and socially acceptable methods and
technology, made universally accessible to individuals and
families in the community through their full participation and
at a cost that the community and country can afford to
maintain at every stage of their development in the spirit of
self reliance and self determination
 Access to primary health care has been limited, particularly in
rural areas. Quality of these services has also been inconsistent
and generally poor.
 Kenyan Government devotes significant proportion of its
resources in investing in human capital both in education and
health-care sector.
Subsidy consideration
 It has been estimated that up to 63% of child mortality could be
averted through targeted coverage of inexpensive health products
such as iron fortification, point of use water treatment and
insecticide-treated bed nets, however there is limited access to
this services even at low prices among poor.
 Thus, free or highly subsidized distribution on basic package of
child, maternal, reproductive health and HIV/AIDS services is
often advocated as a necessary strategy for rapidly increasing
coverage and reducing morbidity and mortality.
 Subsidizing this services ensures that primary health care
services are accessed by all hence promoting healthcare equity
and universal coverage. However, for this to be sustainable,
community must be engaged from the beginning so that there is
sustainability.
Malaria and Subsidy
Malaria is one of the world’s foremost public health
concerns, killing close to 1 million people every year.
 The global fight against malaria has been continually
challenged by poor access to affordable and effective
medicine, unreliable public health facility supply and
limited availability in the private sector.
In Kenya, ACTs are now the only effective class of antimalarial drugs which are un affordable to the poor.
Lowering the cost of treated bed nets and anti-malarial
drugs below their current market by means of subsidy
addresses the issue of risk and equity.
Subsidy and Social Capital
 Social Capital is the expected collective or economic benefits
from the preferential treatment and cooperation between
individual and groups. These pattern of social
interrelationships enables people to coordinate actions and
achieve desired goals.
 In health, social capital is experienced at individual and
community levels where solidarity and norms make people
willing to participate in various social activities which can
positively influence health . For example construction of
toilets through community led total sanitation (CLTS)
Cont.
 Achieving universal health coverage in Kenya still remains a
challenge that requires attention due to poverty and overstretched
health system. Due to these challenges, the Government provides
subsidy to allow equity and access to health care services.
 However, subsidy disrupts social capital and creates over
dependence by the community, this limits the community from
solving their own problems.
 Subsidies aimed at helping the poorest sometimes associate a
certain technology with poverty and the need for assistance
further distorting demand which can influence negatively to the
access of healthcare services
Subsidy on Sanitation Hardware
 Community Led Total Sanitation, or CLTS, is an approach
which facilitates a process of empowering local communities
to stop open defecation and to build and use latrines without
the support of any external hardware subsidy
 Hardware subsidy provides funds to cover the cost of
constructing latrines in poor households which distorts if not
undermines directly the most important drivers of change in
sanitation behavior, namely community wide social pressures
that revolves around shame, embarrassment and pride.
 CLTS measures its success on the basis of the use of the
latrines constructed, and more importantly, on the complete
end to open defecation.
Subsidy and Sustainability
 Donor projects are short lived and have no post project
periods. Its therefore of prime importance to facilitate the
integration and participation of the local beneficiaries and to
develop a sense of ownership towards the program. For
example sanitation infrastructure.
 The sustainability of the water and sanitation infrastructure
which is constructed through subsidies can only be ensured if
local community has a sense of ownership towards these new
facilities which comes along with great acceptance and
willingness to operate and maintain this newly constructed
infrastructure.
 One of the main problems with subsidies appears to be that the
different objectives of any public subsidy remain non-explicit.
Advantages and disadvantages
Advantages
• If well targeted, can have very positive effect
• Addresses access problems directly and may be better
targeted
• Uses existing tariff collection and payment system
Disadvantages
• Lack of financial sustainability, if there are not
sufficient public funds to support it
• Subsidies may not increase access to poor households
• Subsidies often create expectations that cannot be
fulfilled in surrounding and suppress demand
Cont
• The use of subsidies for construction of “standard”
facilities distorts the market and suppresses
innovations that might bring down costs
• Subsidies aimed at helping the poorest sometimes
associate a certain technology with poverty
• Requesting a down payment or contribution to assess
demand before a subsidy is released may exclude the
poorest households
• Subsidies may distort markets, and can impose large
economic costs
Conclusion
At the local level subsidy erodes self determination
and weaken the social capital and collective response.
However subsidy should be allowed in a limited way
where it influences positive change, reduces
morbidity and mortality.
At international level, subsidy in form of equipment
and technologies must be packaged with capacity
development for local operation and maintenance
which will ensure sustainable use.
Recommendation
• Policies should be developed to guide areas in health
where subsidy could be applied
THANK YOU
ASANTE