1. Inaugural Conference of the African Health Economics and Policy Association (AfHEA) Accra - Ghana, 10th - 12th March 2009 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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:  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

8. 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

9. Inaugural Conference of the African Health Economics and Policy Association (AfHEA) Accra - Ghana, 10th - 12th March 2009 International Experience  Nigeria  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

10. 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

11. 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.

12. 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%

13. 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  Lack of absorptive capacity in areas of greater need  Historical approach to budgeting  Inter-agency relations  Efficiency concerns becoming more pronounced!!

14. 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

15. 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.