Transcript Health Care Financing

Significance & appropriateness
of donor aid to Health
Presented by
Henry Chewe Kansembe
Contextual issues
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The administration of the health system has been divided into
the following levels:
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Ministry of Health HQ
District Health system (DHO, District Hospitals, Health centres
General Hospitals
Central Hospitals
The core level of the reformed Zambian health system is the
district which includes community-based health workers;
Health posts and centres and the district hospital
Health Financing Policy (1)
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Zambia’s health care financing policy treats
basic health care as a basic human right that
should be availed to all citizens and equally
accessible to all.
The policy assumes the existence of a well
defined and systematically implemented Basic
Health Care Package
Health Financing Policy (2)
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To ensure sustainable financing of the health sector
domestic resources from general taxes constitute the
dominant source and anchor of financing health
service Provision
The goal is to increase GRZ allocation to health
from 12 to at least 15 percent of the national budget
in line with the Abuja and Maputo Declarations.
Health Financing Policy (3)
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External financing remains an important ingredient in
Zambia’s resource mobilisation strategy.
The preferred mode of providing donor support to health has
been through pooling of funds in a single basket to implement
a jointly agreed upon strategic plan and annual action plans.
The initial district basket has now been expanded to include
capital expenditures, training institutions, statutory boards,
technical assistance and human resource development.
Public Private Partnerships are also taken to be an integral
part of Zambia’s health care strategy as they help in ensuring
that resources are maximized in the delivery of health care.
Financing Sources
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Since the inception of health reforms, national allocations to the health
sector have been stable at around 11.6 % of GRZ discretionary budget or
1.9 % of public health expenditure to GDP
The financing gap has been bridged by donors accounting for more than
45 per cent of total public health care expenditure.
The Public Per Capita Health Expenditure is around US$11 though the
PET report puts at over US$ 30 taking into account Global and Pepfar
funds for HIV
User fees have in the past contributed about 4% and used at point of
collection. Since 2006 April user fees have been scrapped in the rural
areas.
Preparations are under way to introduce health insurance beginning with
civil servants and scale up later to all formal sector employees
An marked tax of 1% on interest on saving account is place which yields
around USD 2 million per year
GRZ & Donor Spending in the
Public Health Sector (in US$m)
Year
GRZ
Donor
Total
GRZ share
(%)
2001
63.03
40.95
103.99
60.6
2002
65.09
42.69
107.79
60.4
2003
62.67
52.33
115.00
54.5
2004
70.50
73.06
143.56
49.1
Key issues in external aid
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The key issues to consider with regard to external
funding from the recipients view point include:
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Adequacy
Sustainability
Predictability
Alignment to national systems
Flexibility
fungibility
Different modes of support (DBS, SWAps, Projects
& loans) fair differently in this light
Adequacy & significance
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Globally, health aid increased to more than $10
billion in 2003 from $2.6 billion in 1990 mainly
attributable to initiatives to address HIV & malaria.
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Needless to say, Zambia is a beneficiary in the
increase with most funding for funding for HIV,
Malaria and immunization coming from global
initiatives including global funds and Gavi
Donor Disbursements
(Internal funds in US$ ‘m)
CP
Global Funds
DGIS
DFID
1997
1998
1999
2000
2001
2002
-
-
-
-
-
-
0.05
-
3.63
-
3.00
-
4.59
3.69
4.58
-
2003
2004
2005
7.66
30.98
22.11
8.67
12.34
11.98
13.03
2.43
10.22
-
9.24
SIDA
1.17
0.63
4.19
6.22
4.96
6.13
6.36
11.77
7.17
DANIDA
1.53
1.14
1.13
1.71
3.60
4.48
5.75
7.25
5.82
1.82
1.01
1.32
1.69
2.88
3.81
3.15
4.15
1.11
0.44
0.05
0.18
1.32
2.54
0.16
0.09
0.33
2.52
1.43
0.25
0.84
DCI
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USAID
-
-
-
GAVI
-
-
-
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WB
-
-
-
-
-
-
-
Others
0.25
0.11
2.27
0.74
2.26
3.77
5.19
1.40
1.99
Total
3.00
7.33
11.59
19.38
17.69
28.51
52.93
68.43
69.40
District Basket
Year
CPs
GRZ
1999
80%
20%
2000
92%
8%
2001
85%
15%
2002
92%
8%
2003
96%
4%
2004
84%
16%
2005
73%
27%
2006
82%
18%
2007
62%
38%
Adequacy & significance
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Note the increase in donor aid assistance over
the years from only USD 3 million in 1997 to
over USD 69 million for internal funds
The increase mainly attributable to global
initiatives like the global funds
The small & volatile share of govt share in the
district basket (though govt bought drugs and
is the only financier of salaries
Adequacy & significance
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Donor is significant and indispensable for some
components of the budget such as the district basket
and ART program
Is donor aid adequate or even too much?
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Misappropriation / misuse?
Inter country comparison of per capita expenditure on
health?
Diminishing returns to health expenditure?
Socio-economic determinants?
Sustainability
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Sustainability entails a country’s capacity to fund the full
costs of a particular program, sector, or economy
It implies the capacity of a country to accommodate the
expenditures initially financed with those grants within their
own domestic envelope
An example funds to finance immunization currently
estimated to cost USD 7m. GRZ should gradually attain
vaccine procurement independence by 2012
The key question is can govt gradually take over financing
the ART program whose total cost would displace a huge
percentage of public health expenditure
Sustainability
Donor
GRZ
Total
Drugs & Medical Supplies
26.91
54.46
76.85
Anti Retroviral Drugs
69.23
5.45
74.68
Vacines
16.50
8.52
25.02
112.64
68.44
176.55
Total
Sustainability
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It is possible for Government to take over the
costs of some programs like immunization in
the medium term
Bigger programs like ART are likely to
remain donor dependent for a long time. The
question is for how long.
Is development of financial sustainability
plans an answer?
Predictability & Volatility
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Often health planners depend on vague indications of future
aid commitments in the budget preparation process
Though donors make substantial aid commitments, data show
that commitments consistently exceed actual disbursements.
Other sources of aid volatility include exchange rate
fluctuations, administrative delays and policy decisions by
donors
Donor preferences can change from one year to the next in
response to changes in behavior in the recipient country or to
political events in the donor country.
Predictability & Volatility
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Problems can also begin with donors, which may have
burdensome procurement and reporting requirements.
Conditionality may occasion stoppage of disbursements in
the event of failure to attain agreed upon benchmarks.
Donor commitments are short term, but spending obligations
are long term
Countries face significant risks if they establish health
systems that cannot be maintained if donor preferences
change.
Alignment to national systems
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The budget process begins with dissemination of a call
circular and the green paper containing macroeconomic and
the medium term fiscal framework.
The fiscal framework contains revenue projections and sector
ceilings for the coming three years
The sector then applies a resource allocation formula to share
resources between levels and geographical areas
The ceilings together with other program specific technical
planning information are disseminated during national and
provincial planning meetings
Alignment to national systems
2007
PE
2008
2009
2010
392.30
442.51
511.51
577.19
30.00
24.75
24.75
24.75
Other Programs 437.88
512.54
681.99
794.78
o/w Infrastructure
96.20
117.50
160.80
108.00
Drugs
52.60
113.60
99.70
191.60
-
61.10
61.60
81.70
830.18
955.06
1,193.50
1,371.96
o/w recruitment
Equipment
Total
Alignment to national systems
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The GRZ ceilings are a combination of
domestic revenue and DBS. From this view
point DBS is the most aligned mode of
support
The MTEF requires capturing all sources of
finances and planners need to develop a table
like one in the next slide
Alignment to national systems
2007
2008
2009
2010
GRZ
237.19
272.87
341.00
391.99
SWAPS
35.14
34.02
33.34
32.75
Projects
88.78
91.08
119.61
114.07
Loans
7.00
7.00
2,375.11
2,412.97
Total
2,502.95
2,548.81
Alignment to national systems
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Funds from domestic revenue and DBS provided in the green
paper
SWAp commitments obtained through snap surveys whose
results are fairly accurate
Projects and loans from project documents and are the most
problematic
Global funds go through 3 principle recipients of which only
MOH funds are easy to capture. The rest is mainly off budget
Besides global funds are not aligned to budget calendar and
require own reporting and M & E arrangements
Alignment to national systems
Global Funds
Round one phase 2: HIV
19,670,657
Round one phase 2: malaria
18,852,250
Round one phase 2: TB
23,705,340
Round 4
225,000,000
Alignment to national systems
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Other project funds like president’s emergence even
harder to capture as almost all of it is implemented
through NGOs
A small proportion is channeled through the basket
and for the rest educated estimates are done to
capture a portion of it in the national budget.
Hard to tie to activities and programs in the budget
especially at national level
Alignment to national systems
Donor
Program
Sector
2007
2008
2009
2010
SO5: HIV/AIDS Emergency Plan
HIV/AIDS
0.2
0.2
0.2
0.2
SO6: HIV/AIDS Emergency Plan
HIV/AIDS
4.9
4.9
4.9
4.9
S07: Reproductive Health
Health
3.2
3.2
3.2
3.2
S07:Maternal & Child Health
Health
4.5
4.5
4.5
4.5
S07: Malaria
Health
7.6
5.0
5.0
5.0
S07: TB
HIV/AIDS
1.0
1.0
1.0
1.0
S07:HIV/AIDS Emergency Plan
HIV/AIDS
57.0
57.0
57.0
57.0
S08:HIV/AIDS Emergency Plan
HIV/AIDS
0.0
0.0
0.0
0.0
USAID S09:HIV/AIDS Emergency Plan
HIV/AIDS
32.8
32.8
32.8
32.8
CDC
USG
Total
HIV/AIDS
67.0
67.0
67.0
67.0
178.2
175.6
175.6
175.6
HIV/AIDS Emergency Plan
Alignment to budget processes
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As a result of the above reasons, etimates
from 14 countries show that
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30% are not recorded in the B/P
20% recorded in B/P but not in budget
30% earmarked to projects recorded in budget
20% General budget support
Flexibility
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Earmarking tends to increase the rigidities of
government budgets
The total health budget may show no funding
gap but freedom to move funds to underfunded
priorities is very limited
Donor funding skewed in favor of programs like
HIV/AIDS and malaria while other equally
important programs like maternal health are
neglected.
Fungibility
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Fungibility of aid is the diversion of funds to public
expenditures other than those for which the aid is intended.
For example: a donor gives aid to a country for primary
health care. The recipient may choose to move domestic
funds to referral hospitals because primary care is already
funded.
Though this may be optimal, problems can arise when donor
funding to primary care reduces as re –allocation from higher
level care may be difficult
Aid harmonization
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To better coordinate donor funding, the preferred mode of
funding for the health sector is the SWAp
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Shared vision and priorities for the sector between with CPs, ensuring
government ownership and leadership
One Performance assessment framework and joint M & E efforts
between government & partners
A comprehensive sector development strategy reducing asymmetry in
funding health programs
Enhances budgeting process and public expenditure management by
capturing all funding sources and expenditures , putting resource
allocation decisions into a MTEF based on national priorities
Can be aligned new aid instruments, macroeconomic and public
sector management , NDPs & achievement of the MDGs
Aid harmonization
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The ultimate preference is DBS when conditions which
ensure health remain a priority are in place
DBS would furnish an opportunity to build economic
infrastructure like schools, roads, communication facilities
without which the goal improving health status will remain
elusive
DBS will strengthen macroeconomic management and
minimize foreign exchange market destabilization occasioned
by off-budget support.
The End
Thank you for listening