Implementation challenges of health financing policy reforms: experiences from Sub-Saharan Africa Peter Kamuzora Institute of Development Studies University of Dar es Salaam

Health reforms themes Health reforms have been summarized under four major themes: (Mills 1998) –Identifying and responding to major health problems –Reducing the role of the state in providing and financing health services –Increasing the number and yield of sources of health finances –Organizational and management changes in the public sector

Health financing policy objectives Clear objectives grounded in core values Could be applicable to all countries Objectives provide the direction in which reforms should try to push the health system (achieve fairness) Objectives that have received international support: –To provide financial protection (from catastrophic costs of using health services when needed) –To distribute the burden of contributing to health financing according ability to pay (those with greater ability to pay to make greater contributions) –To distribute the benefits of health care according to need for health services (inability to pay should not become a barrier to accessing & benefiting from needed health care) Reforms were expected to achieve these objectives

Reforms implementation experience Tax funding –A core foundation of SSA health systems (countries financed health care through this mechanism) –Countries found it difficult to finance care through tax funding: Economic crisis (debt crisis – interest payment & debt repayment) Unable to increase tax revenue – due to limited tax base –As part of SAPs countries were required (WB & IMF) to: reduce their funding of health care reduce their funding of health care introduce alternative health financing options introduce alternative health financing options –Tax funding is most equitable Key source for equitable infrastructure development Only funding source that can be actively redistributed between geographic areas to promote equity

Reforms implementation experience User fees –SSA countries were required to increasingly rely on user fees –The arguments for user fees They prevent unnecessary services utilization Alternative source of raising additional finance –User fees became a barrier to access health care e.g. South Africa – decline in attendance (non-communicable disease) after a 50% increase in user fees –User fees (other OOP payments) are most inequitable They place financial burden on patients at times of using services Burden of payment fall on those with worst health status

Reforms implementation experience Voluntary health insurance –Private voluntary insurance (formal sector workers) Mainly in South Africa, Zimbabwe & Namibia Experience shows – have become unaffordable (membership has declined) –Community-based prepayment schemes (rural pop.) In West Africa and East Africa Advocated as a solution to health financing gap in SSA countries However, evidence shows that: –Population coverage remained low –Most vulnerable households were not covered –They have small risk pools & limited cross-subsidies –They are subject to rapidly increasing health expenditure

Reforms implementation experience Mandatory insurance (Social Health Insurance) –Has been introduced in a number of SSA countries –Argument for mandatory insurance: Govt. will focus its limited resources to those unable to pay for health care –Such redistribution of govt. resources does not occur Contributions may be tax deductible (subsidized by the state) In African context govt. is largest single employer –Govt. pays employer SHI contributions from general tax revenue –High cost of insuring civil servants is experienced (e.g. in SA govt. spends $ 150 per civil servant per month for their insurance & $ 150 per uninsured person per year)

Challenges related to user fees How to deal with inability to pay for health care –Introduced exemption systems Exemption systems are difficult to implement –Identification of the poor, –Those unable to pay for services discriminated at H/Facilities removal of user fees –Due to regressive nature & other problems (exemption) some countries (SA, Uganda, Kenya, Zambia) decided to remove user fees –Utilization of health services increased –How to improve resource availability if fees are removed To offset any fee revenue lost To continue providing adequate quality services

Challenges related to insurance How to promote equity –a two tier health system may arise if insurance coverage is not universal One system for higher income groups (accessing quality services) Another system funded through tax revenue for low income groups (minimalist package of services) –A key challenge here is how to cover those outside formal sectors

Policy change implementation challenges Implementing policy change may generate unintended outcomes Experience of user fee removal in SA –‘free care policy’ was not communicated to FLHW before announcing it publicly & introduced with immediate effect –Outcomes: Drug supplies were quickly exhausted (utilization increased) Many workers resented the policy (it increased their workload & FLHW felt they were not consulted or involved in implementation plan)

Policy change implementation challenges Experience of Community Health Funds (CHF) in Tanzania –CHF schemes were introduced without involving district managers in their design and without educating the communities –The district were pressurized by the govt. & ruling party for immediate implementation –Outcomes: District manager covertly resisted the policy No funds to defray administrative costs (no meetings) Failed to educate the beneficiaries about rationale of pooling risks & resources Failed to assess the magnitude of ‘inability to pay’ problem - this generated conflict between community leaders & district managers –This contributed to low enrolment in the CHF schemes

Take away messages 1) African governments should be empowered to make their own decisions on appropriate ways of financing health care in their specific context 2) There is a need for creating awareness of health care financing issues to promote locally relevant and equitable financing options 3) It is important to involve different stakeholders (including the beneficiaries) in decision making on the choice of financing options