1 Public Expenditures Review in Health Agnes Soucat, Lead Economist

2 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 ?

3 Objectives of the health sector and role of the government Why investing in health ?

4 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

5 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

6 Priority areas for public financing in health… Market FailuresRedistribution Health outcomes Pure public goods Merit high externalities goods Poor have worse health outcomes Income protection Insurance market e:g adverse selection Poor are more exposed to financial consequences of illnesses Responsiveness and accountability Poor have less voice to influence policy decisions

7 Specificity of the health sector Outputs are health sector specific but outcomes are multisectoral Levels are intricated Multiplicity of outputs

8 Health sector Finance Agriculture Social Protection Infras tructure Water and Sanitation Education Sector Health Outcomes Litteracy etc.. Improve Quality of Life Revenue generation Safety nets Increase and Protect Income Participation Increase Involvement

9 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

10 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

11 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 ?

12 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?

13 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

14 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?

15 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”

16 Per capita GDP 1990 Improvements in health and economic take-off: changes in Per Capita GDP and IMR in Singapore Contribution to Economic Growth and Poverty Reduction..

17 IMR at the time of Economic Take-off in East Asia Contribution to Economic Growth and Poverty Reduction..

18 Nutrition in agriculture based economies Some diseases: HIV, malaria Child mortality, fertility reduction associated with high investment in education and low dependency ratios Contribution to Economic Growth and Poverty Reduction..

19 Allocative Efficiency: Programmatic allocation : Rwanda

20 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?

21 Technical Efficiency: Key questions –What is the relative weight of various sub- sectors (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)

22 Technical Efficiency:

23 Relative allocation to levels of care: Mauritania Technical Efficiency:

24 Inter-country comparison: measles immunization vs public expenditures

25 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?

26 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 s alaries crowding out other inputs, non salary recurrent “recycled” into staff incentives)

27 Evolution of health budget: Mauritania Input Efficiency

28 Budget of the Ministry of Health by nature of Expenditures Input Efficiency Evolution of health budget: Rwanda

29 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

30 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

31 Physical Access to Essential Health Services, Mauritania, 1999 Poorer Richer

32 Availability of Nurses and Infant Mortality- Cameroon 1999

33 Availability of Essential Drugs per Region, Mauritania, 1999 Poorer Richer

34 BIA India Example Who Gets the Public Subsidy?

35 Population covered by publicly funded health insurance, Thailand 2000

36 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 ?

37 Private spending equals or exceeds public spending in SSA

38 Donors are a major source of funding in some countries Financing of health services Financing sources:Rwanda

39 Lack of Predictability of Donor Assistance

40 Tax finance doesn’t guarantee poor do well

41 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 ?

42 Ethiopia: MDGs Needs Assesment total incremental cost per capita

43 Expected impact of key interventions on under five mortality rate, Ethiopia Prevention/promotion LLITN) for U 5 1%77%84%11.% Family planning9%56%67%6.2% Hib vaccination0% 51%4.7% Vitamin A supplementation56%77%84%4.4% Complementary feeding34%63%67%4.3% Exclusive breast feeding38%63%80%4.3% (1) Key interventions (2) Baseline (3) Target 2009 (4) Target 2015 (5) Est. reduction in U5MR Estimated U5 mortality reduction by 2009 is 48% and 61% by MMR 36%

44 Projected Government Health Expenditures as a Percent of GDP Needed for a $34 Per Capita CMH Recommended Package of Services for a $34 Per Capita CMH Recommended Package of Services

45 Cost of scaling up health services incremental cost per capita for reaching the MDGs Scale Up StrategyHealth OutcomesMDGs 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

46 Prediction on achieving MDG for child survival in Ethiopia Achieving the Health extension/outreach service targets Achieving the family/community based service targets Achieving the clinical based service targets Deaths per thousand births

47 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