OUTLINE

Health Systems Financing and the Path to Universal CoverageNew York, October 2010

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Health Systems Financing and the Path to Universal Coverage

by

David B Evans, Director, Health Systems Financing, Health Systems and Services

Carissa Etienne, Assistant Director General, Health Systems and Services

Health Systems Financing and the Path to Universal Coverage

by

David B Evans, Director, Health Systems Financing, Health Systems and Services

Carissa Etienne, Assistant Director General, Health Systems and Services


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OUTLINEOUTLINEOUTLINEOUTLINE

1. Universal coverage: the state of the world

2. Health systems financing: determinant and solution

3. The World Health Report 2010 and beyond


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Intervention CoverageIntervention CoverageIntervention CoverageIntervention Coverage

1. Coverage with skilled birth attendants as low as 5%. More than 20 countries less than 50%.

2. Coverage with 3 doses of DTP at 1 year: as low as 20% and around 25 countries less than 70%.

3. Great inequalities within most countries – the rich typically have coverage similar to high income countries, and the poor obtain substantially less


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Overall coverage and level of inequity differ by types of services

Generally access to delivery by medically trained person more inequitable than vaccination services

05

01

00

1 2 3 4 5

MAR, 2004

SBA DTP

Measles

Pe

rce

nta

ge

quintile

Graphs by code and year

05

01

00

1 2 3 4 5

KHM, 2000

SBA DTP

Measles

Pe

rce

nta

ge

quintile


Patterns of exclusion: delivery by a medically trained person (SBA), DTP3 (DTP) and MCV (MCV)

– from DHS

Patterns of exclusion: delivery by a medically trained person (SBA), DTP3 (DTP) and MCV (MCV)

– from DHS


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Financial Risk ProtectionFinancial Risk ProtectionFinancial Risk ProtectionFinancial Risk Protection

Around 150 million people suffer financial catastrophe each year and 100 million pushed into poverty because they use health services, and are forced to pay out of pocket.


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A long way from Universal CoverageA long way from Universal CoverageA long way from Universal CoverageA long way from Universal Coverage

World Health Assembly Resolution 58.33, 2005:

Urged countries to develop health financing systems to:

Ensure all people have access to needed services

Without the risk of financial catastrophe linked to paying for care

Defined this as achieving Universal Coverage: coverage with health services; with financial risk protection; for all


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What role does health financing play? What role does health financing play?

Three inter-related contributing factors

1. Constant battle to raise sufficient funds for health in all settings, but fundamental insufficiency of resources in many countries. Need to diversify funding sources in others

2. Too much reliance on direct out-of-pocket payments to finance health in many countries – limited financial risk protection. In others, the search for cost–containment means there is pressure to increase cost-sharing.

3. Inefficiency and inequity in use of the available resources in countries, rich and poor


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Solutions?Solutions?

Social determinants of health

Socio-economic context

Health systemsoutputs

Health systemsinputs

Health systems &health

outcomes

Supply Demand & Supply Direct effects


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Many interacting solutions but health financing is keyWHO Framework for Assessing Health Systems

(World Health Report 2000; Everybody's Business 2006)

Many interacting solutions but health financing is keyWHO Framework for Assessing Health Systems

(World Health Report 2000; Everybody's Business 2006)

INPUTS


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Raising Sufficient Funds: Fundamental Insufficiencies Raising Sufficient Funds: Fundamental Insufficiencies

High Level Task Force on Innovative International Financing for Health Systems 2009:

A set of essential services that includes HIV prevention and treatment, and the accompanying health systems development for all interventions – average of $42 per capita (unweighted) in 49 low-income countries in 2009, rising to $65 in 2015

31 of them spent less than $31 per capita per year 2008. Only 8 have any chance of reaching the required funding from domestic sources by 2015.


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How to raise more domestically or diversify funding sources in higher-income countriesHow to raise more domestically or diversify funding sources in higher-income countriesIncrease the priority given to health in government budget

allocations– 45 countries currently devote less than 8% of their total

spending to health, and 14 countries devote less than 5%

– Taken as a group, the 49 low-income countries could raise an additional US$ 15 billion per year for health from domestic sources by increasing health’s share of total government spending to 15%.


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Raise more domestically or diversify funding sources (cont)

Raise more domestically or diversify funding sources (cont)

Raise revenue for health more efficiently– In Indonesia clear and consistent regulations and a policy of zero-

tolerance for corruption increased tax yield from 9.9% to 11% of non-oil GDP over four years

Find new or diversified sources of funds e.g.– Sales taxes: Ghana funded its national health insurance partly by

increasing the value-added tax (VAT) by 2.5% (p27) – "Sin" taxes, particularly on tobacco and alcohol: a 50% increase in

tobacco tax alone would yield an additional US$1.42 billion just 22 low income countries for which sufficient data exists.

– A currency transaction levy would be feasible in many countries. – Solidarity levies - Gabon raised $30 million for health in 2009 by

imposing a 1.5% levy on companies handling remittances and a 10% tax on mobile phone operators

Proportion of households with catastrophic expenditures vs.share of out-of-pocket payment in total health expenditure

.01

.03

.1.3

13

815

% o

f house

hold

s w

ith c

ata

stro

phic

exp

end

iture

(lo

g)

3 5 8 14 22 37 61 100

out-of-pocket payment in total health expenditure % (logarithm)

OECD others

High Reliance on Direct, Out-of-Pocket Payments (OOPs). Catastrophic expenditures and reliance on OOPs

(OOPs/THE)

No difference is found between social health insurance or tax-based financing systems in terms of protecting households against catastrophic expenditures (Xu et al., Health Affairs 2006).


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Threshold?Threshold?

Only when the proportion of direct, out-of-pocket payments in total health expenditures gets to around 20-30% that the incidence of financial catastrophe and impoverishment falls to negligible levels.

Recommendation: move as closely as possible towards this level by strengthening compulsory prepayment (tax, insurance) and pooling


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Optimizing prepayment and pooling: learning from country experiences

Optimizing prepayment and pooling: learning from country experiences

– It is possible to make substantial progress towards reducing direct payments, increasing prepayment and covering all people from pooled funds even at lower levels of national income. Chile, Colombia, Mexico, Rwanda, Thailand and Turkey have all made significant progress towards universal access by creating mechanisms that spread the financial risk across the population in the last decade - as have Brazil, China, Costa Rica, Ghana, Kyrgyzstan and the Republic of Moldova.

– Countries choose different mechanisms, mostly involving some mix of tax-based funding with various forms of mandatory insurance, Community insurance and micro-insurance have and can play a valuable role in the transition.

– Where people are allowed to opt-out, it is difficult to ensure that everyone has access to needed services of good quality. The rich and the healthy opt out and the poor and sick are left with poor services.

– Where pools are fragmented, equity goals are much more difficult to achieve – different groups capture better benefits and are reluctant to share


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Progressive Realization and Tradeoffs


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Inefficiency: Some countries obtain higher levels of Inefficiency: Some countries obtain higher levels of health and coverage for the same expenditure health and coverage for the same expenditure

Inefficiency: Some countries obtain higher levels of Inefficiency: Some countries obtain higher levels of health and coverage for the same expenditure health and coverage for the same expenditure

10

100

1,000

60 62 64 66 68 70 72 74 76 78 80

Life expectancy (years)

To

tal

he

alt

h e

xp

en

dit

ure

pe

r c

ap

ita (

US

$,

20

06)

India

Thailand

China

Uzbekistan

Sri Lanka

Viet Nam

RussiaTurkey

Colombia

Peru

Brazil

Egypt

Bangladesh

Cost RicaCuba

UruguayMexico Chile

Kuwait

Comoros

Palau

Namibia

Hungary

Turkmenistan

Seychelles

Czech RepublicCroatia

Grenada

Latvia

Jordan

Haiti

Nauru

Marshall

Trinidad & Tobago

Kazakhstan

Tuvalu


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How much is wasted?How much is wasted?

We estimate that somewhere between 20% and 40% of health resources could be wasted through 10 common causes of inefficiency

Possible areas to search for increased efficiency include

Reducing unnecessary expenditure on medicines and health technologies, using them more appropriately and improving quality control

Reducing leakages and corruption Improving hospital efficiency Choosing the right interventions


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Systemic causes of inefficiencySystemic causes of inefficiency

Paying providers:• Fee for service inefficient generally• Payment for performance has been shown to increase

coverage and quality, but needs a good information system and has to be modified frequently

Active purchasing:• Has the potential to improve efficiency, but requires

strong management and no corruption

Fragmentation:• not only makes it difficult to achieve equity goals, but is

inherently inefficient


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But gradient of inequity may vary by country as well as service

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01

00

1 2 3 4 5

MDG, 1997

SBA DTP

Measles

Pe

rce

nta

ge

quintile


05

01

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1 2 3 4 5

VNM, 2002

SBA DTP

Measles

Pe

rce

nta

ge

quintile


Protecting the poor and vulnerable: Patterns of exclusion differDelivery by a medically trained person (SBA), DTP3 (DTP) and MCV (MCV)

Protecting the poor and vulnerable: Patterns of exclusion differDelivery by a medically trained person (SBA), DTP3 (DTP) and MCV (MCV)

Source: DHS surveys


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Protecting the poor and vulnerableProtecting the poor and vulnerable

– Free services for groups (exemptions or vouchers) or conditions – exemptions have proved particularly difficult to implement in Africa and ensuring particular services are at zero costs for everyone might be administratively easier

– Charges are not the only financial barrier - see next slide


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Protecting the poor and vulnerable (cont)Protecting the poor and vulnerable (cont)

– Cash transfers, conditional or otherwise, offer options for ensuring greater access and providing greater financial risk proteciton. Conditional transfers most appropriate for clearly defined, measureable actions where target group can be easily identified


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OUTLINEOUTLINEOUTLINEOUTLINE

1. Universal coverage: the state of the world

2. Health systems financing as a key determinant and solution

3. The World Health Report 2010 and beyond


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World Health Report 2010 World Health Report 2010

Health Systems Financing: the Path to Universal CoverageHealth Systems Financing: the Path to Universal Coverage To be launched by WHO on 22 November 2010 followed by a Ministerial

Conference to discuss implications at national and international levels. Hosted by the German Government

Builds on WHO Constitution; Alma Ata and Health for All; World Health Report 2008 on Primary Health Care in which Universal Coverage was

one of the four key areas


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World Health Report 2010 World Health Report 2010

1. It builds on country experiences to identify what are options for • Raising more or diversifying funding for health• Minimizing reliance on direct, out-of-pocket payments through

prepayment and pooling• Improving efficiency and equity in resource use

2. It is a message of hope: many examples of countries that have made good progress in at least one of these areas. So every country could do something in at least one of these areas

3. While much of the report is technical, the last chapter recognizes the political realities – there are a lot of necessary steps to ensure that good ideas are implemented in practice


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How can the global community better assist countries move more rapidly towards UC

How can the global community better assist countries move more rapidly towards UC

1. Donor and lending institutions agree to mechanisms to ensure predictable, stable, increased flows (for health) – keep promises.

2. Donors and lending institutions fund priority activities included in PRSPs, SWAPs, or strategic plans - or provide budget support to government. Recipient govts should decide priorities rather than donors

2. Channel external funds through existing or nascent institutions for pooling funds rather than bypassing them e.g. Rwanda.


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Actions for Global Community - 2Improving Efficiency

Actions for Global Community - 2Improving Efficiency

4. Reduce fragmentation and transaction costs, particularly in the way external funds are channeled and with application and reporting – Estonia for HIV and drug users; Kyrgyzstan for TB funding. Rwanda permanent secretary reported at WHA2010 that Rwanda has to report on 890 different health indicators to the various donors, almost 600 for HIV and TB alone. Vietnam had 400 aid missions to review health projects in 2009.

5. Practice what we preach – get more efficient at global level rather than continually introducing more fragmentation, more secretariats – now more than 140 global health initiatives of various types


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Actions for Global Community - 4Actions for Global Community - 4

6. Provide scaled up support to allow countries to develop and implement health financing strategies, and consistent health plans, allowing them to move more quickly towards, or maintain, Universal Coverage

How?

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