Innovative Solutions for Funding Health:
Past, Present, & Future
Meeting of Ministers of Health and Finance
on Domestic Financing for Health
12 November 2013
Addis Ababa, Ethiopia
What we heard from the Honorable Ministers, MPs,
Delegates, and Civil Society in the video was encouraging…
“Departure from
traditional
thinking…”
“Efficiency &
effectively using
existing
resources…”
“Partnership with
private sector…”
“Community…”
“Thinking outside
of the box…”
“Go beyond the
norm…”
“Sustainability”
“Homegrown…”
“Suite the needs of
African
continent…”
Value for Money
New technologies
“Political will…”
In 1962, child mortality and family size divided the world into
developed and emerging economies, with little in the gap…
Emerging
Economies
Developed
Economies
…but over the past 50 years there has been a dramatic shift
in the organization of the world trending to smaller families
…and then family
size declines
First, child mortality
declines…
2
1
We also start to see longer life expectancy across all
countries…
Over the past 50 years, life expectancy in the US gained just
7 years as new diseases become more prevalent in society
Polio,
Measles
(1962/63)
Influenza
Epidemic
(1918)
Smallpox
(1915)
Penicillin
(1925)
As countries experience economic growth, there is a
tendency for higher health costs to accumulate later in life…
“…nearly 30% of lifetime health expenditure is
incurred during middle age…
…and nearly an additional 40% during the senior
years…”
Total: 70-75%
In the past decade, Non-ODA has contributed greatly to the
development aid universe creating new funding opportunities
600
Type
Total Development Aid from 1967 - 2011
10-yr CAGR
Non-ODA
37%
ODA
9%
500
499
(US$, billions)
400
Type
300
10-yr CAGR
Non-ODA
-1%
ODA
-7%
200
Non-ODA + ODA (9%)
100
ODA (7%)
134
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0
Source: OECD data 2013; Non-ODA is all aid related investments including PPP, other than Official Development Assistance as defined by OECD.
We might want to start thinking a little more creatively and
collaboratively about funding health…
As the world develops, demographics shift, people live longer…
As health interventions become more expensive, and aid more dynamic
PRODUCT(RED)
Established: 2006
Objectives: To build a commercial development product using consumer contributions
Source of funding: Percentage of profit generated from purchase of (RED) products (Apple,
Microsoft, Starbucks etc) by consumers worldwide
Pays a fee for
PRODUCT (RED)
(RED) trademark
$10
$10
Funding raised to date: > $ 215 Million
Impact: 14 million people with HIV/AIDS in Sub-Saharan Africa
Advanced Market Commitments (AMC)
Established: 2007
Objectives: To stimulate manufacturer to produce new vaccines at affordable prices
Source of funding: Donor Governments of Canada, Italy, Norway, Russia, UK and Gates
Foundation
Assess if the
vaccine
meet criteria
Vaccine
Manufacturers
Vaccines are delivered
to countries
Enter into procurement
agreement
Donor
Governments
Independent
Assessment
Committee
Provide financial
support to AMC
Funds
UNICEF
Contribute to long term
cost of the vaccines
GAVI
Alliance
Funding raised to date: US$1.5 billion donor commitment
Impact: Access to pneumococcal vaccine 10 years sooner. Could save 1.5 mm lives by
2020. Beneficiaries include Benin, Cameroon, CAR, Congo & other African countries
Debt2Health
Established: 2007
Objectives: To convert debt service payments into new investments in health
Source of funding: Amount of debt foregone in developing country by creditor country
Creditor
Beneficiary
Debt cancellation
Counterpart
Payment(s)
Global Fund
Funding of grants based on
Performance based funding system
Funding raised to date: € 170 million
Impact: Debtor countries include Pakistan, Indonesia, Cote d’Ivoire, Egypt
The Global Fund’s Focus in Innovative Finance
RDI
Ratio
ODA as a %
of Total
Development
Aid
Global Fund’s positioning in
Innovative Finance
Timeline
15
RDI Ratio: Relationship between a country’s lower disease burden & income level
Pay-for-Performance Instrument
Product design phase at the Global Fund
Objectives: To leverage upfront private investment for malaria intervention programs
Source of funding: Impact investors (e.g. high net worth individuals, foundations)
5. Repayment and ROI
from performance-based
payments
Outcome Funders
1. Upfront investment
Impact
Investors
Instrument-issuing
organization
2. Funding for operating costs
Service Provider
3. Deliver interventions
Funding targeted: US$ 20-30 million
Impact: Increase efficiency of program implementation
Verification Agent
4. Outcome and
impact results are
independently
verified
Health Microinsurance
Product design phase at the Global Fund
Objectives: To build a business model for quality primary health care that is affordable,
sustainable, scalable and replicable
Source of funding: Donors, private sector companies, government etc
Problem
Programs
Low
Productivity
Charity/NGO
IFI/DFI
Solution
High
Fees
Sick
Workers
Sponsor
Family
Members
Falling Sick
HIV/TB
Malaria
Gov’t
Private
Sector
Solution requires high quality delivered at a very low cost and will need to conquer the
barrier of cash payments that keep so many from seeking medical care.
Funding Targeted: In discussion with MI intermediaries, telecos, private sector companies
Impact: Overall goal is universal health coverage. Pilot will be initiated in a few countries
Numerous Innovative Financing mechanisms exist…
Taxes
Voluntary
Solidarity
Contribution
Debt
Instruments
Air ticket tax
PRODUCT (RED)
Sustainable
Investing Bonds
Global Solidarity
Tobacco
Contribution
MassiveGood
Pay-forPerformance
National Lotteries
Financial
Transaction Tax
Remittance tax
Crowdsourcing
Matching fund
Diaspora Bonds
PublicPrivate
Incentives
Advance Market
Commitments
Affordable
Medicines Facility
for Malaria
(AMFm)
Vaccine Bonds
(IFFIm )
Debt2Health
Health Micro
Insurance
Contact Information
Innovative Finance Department
Makiko Takayama
Specialist
makiko.takayama@theglobalfund.org
Adam Bornstein
Specialist
adam.bornstein@theglobalfund.org