Transcript Fiscal federalism and Equity

Equitable Financing of Primary Health Care under a Fiscal
Federal System:
Swimming Against the Tide?
Okore A. Okorafor
Health Economics Unit, University of Cape Town, South Africa
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Background
 Equity a major focus of health policy in post-apartheid South
Africa
 Equitable distribution of financial resources (geographic)
 Major shifts in resource distribution experienced between 1996
and 1996 - Centrally controlled allocation process
 Slow-down in progress towards equitable distribution from 1996
 Adoption of a fiscal federal system - provincial autonomy in
determining allocations to health services
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Objective
 What is the implication of fiscal federalism on equity in health care
financing? Case - PHC
 Process of intergovernmental transfers
 Criteria for the size of transfers
 Intergovernmental arrangements and behaviour of sub-national
governments
 Community involvement
 Stakeholder influences / interests
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Methods
 Qualitative Analysis
 Document reviews
 Interviews with government officials
 Quantitative
 Trend in health spending (Equity)
 Deprivation index as proxy for level of “need” for health care
 Regression analysis used to assess relationship between expenditure
and health care needs
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Theoretical predictions for fiscal federalism and equity
 Fiscal federalism: government system with different levels of
government, each with fiscal authority and functions
 Why fiscal federalism:
 Efficiency and welfare gains – assigning responsibility for each type of
public expenditure to the level of government that most closely represents
the beneficiaries of these outlays
 Democracy – greater representation of the community in decision making
processes. Result of evolution towards a more democratic society
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Theoretical predictions for fiscal federalism and equity
 Context: SNG is tasked with the responsibility for providing and
financing the service (exclusively or jointly with other level of
government)
 Greater SNG autonomy in determining allocation to service creates
greater scope for inequities
 Size of SNG own revenue relative to expenditure budget
 Nature and mix of transfers to SNG (Specific/General purpose)
 Differences in local preferences
 Constitutional provisions
 Differences in SNG capacity
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Theoretical predictions & International Evidence
 Equity best achieved if there is significant influence on resource
distribution from the centre
 Australia:
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PHC is responsibility of states and territories
States and Territories generate ~ 40% of expenditure budget
Transfers for health sector to states and territories in the form of SPGs
Commonwealth has substantial influence in amount of resources allocated
to each state/territory
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
International Experience
 Canada
 PHC responsibility of provinces
 Provinces generate most of expenditure requirements
 National legislation ensures that quality and quantity of services provided in
each province is comparable
 India
 PHC responsibility of state
 States generate about 30% of budget expenditure
 Transfers for health to states in form of general purpose grants
 States have full autonomy in determining recurrent budget for PHC
 Inequities in distribution of PHC resources
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
International Experience
 Nigeria
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Local governments responsible for PHC
LGs dependent on transfers from centre – GP grants
Lack of accountability to state or federal government
LGs have full autonomy in determining PHC expenditure
 Inequities in distribution of PHC resources
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Primary Health Care
 PHC approach
 Equity,
 Sustainability
 Acceptability
 Efficiency
 Active participation of the community that is being served
(decentralisation)
 Delivery through a district health system (decentralisation)
 Parallels with fiscal federalism
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Results from the South Africa Case
 Slow-down in progress towards equitable financing in health
sector due to
 Provincial autonomy
 Lack of capacity to cope with the pace of reallocations
 Provinces have maintained autonomy in decision making around
the financing of health and PHC (except for few health
programmes that are funded through SPG)
 Inequity in distribution of PHC allocations; but trend since 2000
shows shifts towards a more equitable distribution.
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Province
Ranking
% change in per capita PHC
2001/02 – 2007/08
Limpopo
9
88.0%
Eastern Cape
8
75.3%
KwaZulu Natal
7
33.5%
Mpumalanga
6
132.4%
North West
5
17.7%
Free State
4
66.7%
Gauteng
3
-22.7%
Northern Cape
2
91.1%
Western Cape
1
-4.45%
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
How?
 Overwhelming political support for equity at all levels of
government. No single unit can be credited with movement towards
equity
 Economic growth – increasing health budget
 Key constraints
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Lack of absorptive capacity in areas of greater need
Historical approach to budgeting
Inter-agency relations
Efficiency concerns becoming more pronounced!!
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Conclusion
 Trend in decentralisation within health systems
 PHC approach also subscribes to a district health system – decentralisation
 PHC approach subscribes to equity and universal coverage
 Possible trade-off between decentralisation and equity.
 Possible trade-off between efficiency and equity
 Challenge 1: Enough autonomy for SNGs to respond to the preferences and
needs of communities, but sufficient central influence to ensure that people are
not disadvantaged based on location.
 Challenge 2: Develop sufficient capacity of all areas to effectively utilise
resources allocated to them
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009
Acknowledgement
 Thanks to International Development Research Centre (IDRC),
Canada for the funds that supported this research project.
Inaugural Conference of the African Health Economics and Policy Association (AfHEA)
Accra - Ghana, 10th - 12th March 2009