Public Expenditure Reviews and the Health Sector

Public Expenditure Reviews and the Health Sector

Public Expenditures Review in Health Agnes Soucat, Lead Economist 1 Presentation Outline Objectives of the health sector and role of the government Objective of a PER Efficiency Analysis and PERs Equity Analysis and PERs Financing What about the health MDGs ? 2 Why investing in health ? Objectives of the health sector and role of the government 3 Objectives of the health sector Improving health outcomes: mortality, incidence/prevalence of diseases, suffering.. Income protection: health expenditures, catastrophic illnesses Responsiveness and accountability: demand, quality of life 4

The role of the Government: Rationale for public action in health Market failures: Public good: commons: non excludable, non rejectable, non competitive Merit goods with a high level of externalities Failures in the insurance market Redistribution/Welfare: Benefiting the poor protecting the poor 5 Priority areas for public financing in health Market Failures Redistribution Health outcomes Pure public goods Merit high externalities goods Poor have worse health outcomes

Income protection Insurance market e:g Poor are more adverse selection exposed to financial consequences of illnesses Responsiveness and accountability Poor have less voice to influence policy decisions 6 Specificity of the health sector Outputs are health sector specific but outcomes are multisectoral Levels are intricated Multiplicity of outputs 7 Health sector

Finance AgricultureSocial Infras Protectiontructure Water andEducation Sanitation Sector Health Outcomes Litteracy etc.. Improve Quality of Life Participation Revenue generation Safety nets Increase and Protect Income Increase Involvement 8 Presentation Outline Objectives of the health sector and role of the government Objectives of a PER Efficiency Analysis and PERs Equity Analysis and PERs Financing

9 Objectives of a PER in health Analyze the amounts of public financing flowing into health related activities whetehre publicly or privately provided, with a focus on analyzing public policies Analyze the performance of the overall health system (public and private) in ensuring sustainable financing and quality service delivery Contributing to better health and protection from catastrophic expenditures in an equitable manner N.B.: National Health Accounts focus on the accounting story while a PER focuses on the analysis of public policies 10 Presentation Outline Objectives of the health sector and role of the government Objectives of a PER Efficiency Analysis and PERs Equity Analysis and PERs Financing What about the health MDGs ? 11 Efficiency Analysis and PERs Examples Efficiency Analysis: Allocative efficiency: does money go to

priority areas? Technical efficiency: are the inputs minimized for a given output? Input efficiency: Is the balance of inputs appropriate? 12 Weak link between public spending and health outcomes * Percent deviation from rate predicted by GDP per capita Source: Spending and GDP from World Development Indicators database. Under-5 mortality from Unicef 2002 13 Allocative Efficiency Key questions: Is the public spending focused on addressing market failures ie pure (or nearly pure) public goods or goods with large externalities, including failures of insurance markets ? Is the public spending focused on activities that contribute to increased returns in education and investments, economic growth and poverty reduction? Is the public spending focused on activities that are most likely to benefit the poor? 14 Priority Programs (examples)

vector control: eg: snails, rats, mosquitos . environmental health : eg: toxic wastes, quality of water, clean air communicable disease surveillance and management: eg Tuberculosis Immunizations: herd immunity 15 Contribution to Economic Growth and Poverty Reduction .. Improvements in health and economic take-off: changes in Per Capita GDP and IMR in Singapore 90 35000 80 30000 70 60 25000 50 20000

40 15000 30 20 10000 10 5000 0 0 1950 1955 1960 1965 1970 1975 1980 1985 1980 1995 IMR per capita GDP Per capita16 GDP 1990 Contribution to Economic Growth and Poverty Reduction .. IMR at the time of Economic Take-off in East Asia

Hong-Kong China Japan Korea Malaysia Singapore Taipei Thailand Approximate Period of economic take-off Average IMR for the take-off period IMR at take off as % of 1960 developing countries average IMR at take-off as a percentage of 1960 OECD country average 1959-69 37

27 119 1953-63 1968-78 1965-75 1960-70 1957-67 1977-87 38 45 48 28 29 46 28 33 35 20 21 34 123 145 159 89 94

150 17 Contribution to Economic Growth and Poverty Reduction .. Nutrition in agriculture based economies Some diseases: HIV, malaria Child mortality, fertility reduction associated with high investment in education and low dependency ratios 18 Institutional support Referal hospitals TB HIV Malaria Nutrition Vaccination Reproductive

health Child Health Income protection Geographical Access Drugs Vaccines Human Resources FR Rw Allocative Efficiency: Programmatic allocation : Rwanda Public Expenditures (executed) by programmatic objective 50000 40000 30000 20000

10000 0 19 Efficiency Analysis and PERs Examples Efficiency Analysis: Allocative efficiency: does money go to priority areas? Technical efficiency: are the inputs minimized for a given output? Input efficiency: Is the balance of inputs appropriate? 20 Technical Efficiency: Key questions What is the relative weight of various subsectors (e.g. Tertiary VS Secondary VS Primary VS outreach VS community based programs ) - What is the mix of services provided (e.g. Curative Vs Preventive) 21 Technical Efficiency: 100% 80%

60% 40% 20% Central Administration Tertiary Primary and secondary 0% 22 Technical Efficiency: Relative allocation to levels of care: Mauritania 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Administration Tertiary

Secondary Primary 1999 2001 2003 2005 23 Inter-country comparison: measles immunization vs public expenditures 100 90 ENVY ZONE 80 70 60 CHAD IVORY COAST

SENEGAL CAMEROON 50 TOGO 40 30 BURKINA FASO CONGO REP. 20 10 0 0.0 20.0 40.0 60.0 80.0 100.0 Health spending per capita (US$)

Average of available data, 1995-1998 120.0 24 140.0 Efficiency Analysis and PERs Examples Efficiency Analysis: Allocative efficiency: does money go to priority areas? Technical efficiency: are the inputs minimized for a given output? Input efficiency: Is the balance of inputs appropriate? 25 Input Efficiency Key questions: Are recurrent cost at the level required by capital invested (eg unreliable, insufficient funding of key inputs (drugs)..) Are Non-Salary Recurrent expenditures and the wage bill balanced? (e.g salaries crowding out other inputs, non salary recurrent recycled into staff incentives) 26

Input Efficiency Evolution of health budget: Mauritania 8000000 7000000 6000000 5000000 Salary Non salary recurrent Investment 4000000 3000000 2000000 1000000 0 1999 2001 2003 27 Input Efficiency Evolution of health budget: Rwanda Budget du ministre de la Sant sur ressources propres

Budget of the Ministry Health nature of Expenditures Paiementsof par nature by de dpenses 12 000 10 000 5-Investissements 8 000 4-Interventions 6 000 3-Fonct. variable 2-Fonctionn. fixe 4 000 1-P ersonnel 2 000 0 2002

2003 2004 2005 28 Presentation Outline Objectives of the health sector and role of the government Objectives of a PER Efficiency Analysis and PERs Equity Analysis and PERs Financing 29 Equity Analysis and PERs Examples Equity Analysis: Physical Access Human Resource Deployment Availability of Drugs or other inputs Benefit Incidence Analysis Equity and Financing Mechanisms

Insurance Incidence Impact of Cost Recovery 30 Physical Access to Essential Health Services, Mauritania, 1999 100 90 80 90 70 80 60 50 70 40 60 Access Poverty Level 30 20 50 10

40 Poorer 0 ASS GOR HEG BKN GUI TAG HEC ADR TRZ ZEM NKC NDB INC Richer 31 Availability of Nurses and Infant MortalityCameroon 1999 250

6 000 200 5 000 150 4 000 3 000 100 per th ou sand p op ulation p er h ealth staff 7 000 nurses Under 5 mortality Expon. (nurses) 2 000 50 1 000 0 0 Region

32 Availability of Essential Drugs per Region, Mauritania, 1999 100 90 80 70 60 50 40 30 20 10 0 Paracetamol AAS Mebendazole Amoxicillin Poorer Richer 33 BIA India Example Who Gets the Public Subsidy?

Share of the Public Subsidy 40.0% 33.1% 30.0% 25.6% 20.0% 10.0% 13.4% 17.8% 2nd Middle 20% 10.1% 0.0% Poorest 20% Income Quitiles 4th

Richest 20% 34 Population covered by publicly funded health insurance, Thailand 2000 70 60 50 % 40 30 20 Other insurance (CMSBS, SSO, VHC) 10 Low income card 0 35 Presentation Outline Objectives of the health sector and role of the

government Objectives of a PER Efficiency Analysis and PERs Equity Analysis and PERs Financing What about the health MDGs ? 36 Fa so re a ui ne a ha na U ga nd a To go

Ta nz an ia Su da n Se ne ga l rr a Le on e N ig er ia au rit an ia M

al i Ke ny a G G Et hi op ia Er it am er oo n te d' Iv oi re ki

na US$ per capita Be ni n 8 Private spending equals or exceeds public spending in SSA 7 6 5 4 Private Public 3 2 1 0

37 Donors are a major source of funding in some countries Financing sources:Rwanda Financement de la sant publique (paiements) Financing of health services 70 000 Millions de Frw 60 000 Recettes formations sanitaires 50 000 40 000 Financements extrieurs 30 000 20 000 Etat 10 000

0 2002 2003 2004 2005 38 Lack of Predictability of Donor Assistance F ig u re 3 . D o n o r C o m m itm e n ts a s a p e rc e n ta g e o f To ta l H e a lth E x p e n d itu re 100 80 M a u rita n ia T a n za n ia M a li E ritre a 60 40 20 0 1997

1998 1999 2000 2001 F ig u re 4 . P e rc e n ta g e o f T o ta l H e a lth E x p e n d itu re F in a n c e d b y E x te rn a l S o u rce s 25 20 G u in e a B e n in B u ru n d i L ib e ria 15 10 5 0 1997 1998 1999 2000

2001 S o urce: W D I and O E C D D A C do no r fu nd ing d atab ase. S taff estim ates 39 Tax finance doesnt guarantee poor do well 50% 40% Poorest 20% Middle 20% Richest 20% 30% 20% Bihar Guinea Peru Ghana Indonesia Kerala

UK 0% Vietnam 10% Denmark % of total subsidy accruing 60% 40 Presentation Outline Objectives of the health sector and role of the government Objectives of a PER Efficiency Analysis and PERs Equity Analysis and PERs Financing What about the health MDGs ? 41 Ethiopia: MDGs Needs Assesment total incremental cost per capita 2005-2015 Total cost per capita 2005-2015 30.00

25.00 US$ 20.00 Total recurrent Total investment 15.00 10.00 5.00 0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 42 Expected impact of key interventions on under five mortality rate, Ethiopia 2005- 2015 (1) Key interventions (2) Baseline (3) Target 2009 (4) Target

2015 (5) Est. reduction in U5MR Prevention/promotion LLITN) for U 5 1% 77% 84% 11.% Family planning 9% 56% 67% 6.2% Hib vaccination

0% 0% 51% 4.7% Vitamin A supplementation 56% 77% 84% 4.4% Complementary feeding 34% 63% 67% 4.3% Exclusive breast feeding

38% 63% 80% 4.3% 43 Estimated U5 mortality reduction by 2009 is 48% and 61% by 2015 . MMR 36% Government Health Expenditures as a Percent of GDP Needed for a $34 Per Capita CMH Recommended Package of Services Government Health Expenditures/GDP (assuming 5 percent annual GDP grow th and total health expenditures of $34 per capita) 40.0 Eritrea Ethiopia 35.0 Ghana 30.0 Projected Percent

25.0 Kenya Lesotho 20.0 Malaw i 15.0 Nigeria 10.0 Uganda 5.0 United Republic of Tanzania Zambia 0.0 44 Cost of scaling up health services incremental cost per capita 2005-2015 for reaching the MDGs Scale Up Strategy

US$ (2004 constant $) 35 Health Outcomes MDGs reached Step 5 : Expansion and Upgrade of Referral Care Further decrease of : child mortality, maternal mortality, HIV MTC transmission Provision of HAART , multi-drug resistant TB and severe malaria treatment Step 4: Expansion and Upgrade of Emergency Obstetrical care Further decrease of : child mortality maternal mortality HIV MTC transmission

Reduced MM by 75% Step 3: First level clinical upgrade Further decrease of: Child mortality Maternal Mortality Malaria, morbidity & mortality TB Reduced malaria mortality by 50% Increase TB DOTS coverage Step 2: Health Services Extension Program Decrease in child mortality Reduction in HIV Mother To Child Transmission Reduction of deaths due to pregnancy by 40% Reduce malaria mortality morbidity Reduce Child malnutrition Reduced child mortality by two third

Step 1: Information and Social Mobilization for Behavior change Decrease in child mortality due to HIV, malaria, diarrhea diseases Reduced HIV transmission Reduced malaria morbidity and mortality Reversed trend in HIV incidence and stabilized trend in HIV prevalence 30 25 Step 5 20 Step 4 15 Step 3 10

Step 2 Step 1 5 Current Health Expenditures 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 45 Prediction on achieving MDG for child survival in Ethiopia Deaths 200 per 180 thousand births 160 140 120 100 80 60 40 20 0 176

172 160 Achieving the Health extension/outreach service targets Current Trend 166 123 Achieving the family/community based service targets Achieving the clinical based service targets 2000 2005 2010 159

107 59 MBB HSDP Scenario MBB Maximu m Access Scenario MDG 2015 46 Conclusion : best practices Focus on who captures public funding: particularly distribution between rich and poor Combine routine HMIS data with with households surveys Place public spending in the context of private expenditures (households insurance, donors) Examine trends..dynamic analysis Evaluate expenditures in the context of changes (e.g decentralisation, epidemiological transition, etc.) Include recommendations on how to improve public expenditures allocation and management 47

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