1. Mobilizing the private sector for HIV and social health protection
Joep M.A. Lange
(acknowledging Onno Schellekens and Marianne Lindner)
PharmAccess Foundation
Amsterdam Institute for Global Health & Development

2. How I (a physician) feel talking about financing (in 12+ slides)

4. Africa spends very little on health care
Health systems in Africa
Africa spends very little on health care
Health care in Africa is underfunded
Population
X mio
Burden of communicable diseases
DALYS
Total health expenditure
x $ mio
Africa
Rest of the world
Source, WHO 2008

5. Health expenditure per capita in sub-Saharan Africa is far from sufficient
24.Sudan
25. Cote d’Ivoire
26.Rwanda
27.Uganda
28.Angola
29.Malawi
30.Congo Rep.
31.Gambia
32.Zimbabwe
33.Zambia
34.Senegal
35.Lesotho
36.Cameroon
37.Sao T & Pr.
38.Cape Verde
39.Swaziland
40.Equatorial Guinea
41.Namibia
42.Gabon
43.Mauritius
44.Botswana
45.South Africa
46.Seychelles
1.Congo Dem. Rep.
2.Burundi
3.Niger
4.Ethiopia
5.Sierra Leone
6.Eritrea
7.Liberia
8.Guinea Bissau
9.Comoros
10.Madagascar
11.Central Afr Rep.
12.Tanzania
13.Mozambique
14.Chad
15.Togo
16.Guinea
17.Mali
18.Mauritania
19.Burkina Faso
20.Ghana
21.Benin
22.Nigeria
23.Kenya
Tanzania

6. The AIDS response did create islands of sufficiency in a swamp of insufficiency (Gorik Ooms, MSF)

7. Health systems in Africa
Donor funding goes mostly to the public sector
The private (for-profit) health sector is underfunded
Other
Private sector
Public sector
Source: National Health Accounts (latest year available); McKinsey analysis

8. Public financing of health in developing countries Lu C, et al
Public financing of health in developing countries Lu C, et al. Lancet 2010;375:
Development assistance for health (DHA) to government had a negative and significant effect on domestic government spending on health (minus $ 0-43 to 1.14 for every $ of DAH).
DAH to the non-governmental sector had a positive and significant effect on domestic health spending.

9. Health systems in Africa
Public services benefit the rich more than the poor
The poor are often not reached
Percentage of lowest and highest quintile using public health services
Source: Preker AS, Langenbrunner JC et al (2005)

10. Health systems in Africa
The private-for-profit health sector is an important provider for the poor
> 40% of lowest income quintile receive health care from private providers
Percentage of lowest and highest quintile receiving care from private providers
Source: The business of health in Africa, IFC 2008

11. Health systems in Africa
Risk pooling is very scarce
Africans lack protection against medical costs; solidarity is limited
Social security and private prepaid health care spending
Only 4% of total health expenditure in Africa is financed through health insurance
Source: WHO 2008

12. Health systems in Africa
Private out-of-pocket expenses are ~50% of total health expenditure
Many fall in a poverty trap; increased inequity
Source: WHO 2008

13. The second law of health economics
Rich countries have a lower share of out-of-pocket expenses than poor countries

14. Health systems in Africa
African health systems are stuck in a vicious circle:
low demand and low supply of health care
Access to quality basic health care among the poor is low
low
Demand
Medical care usage
Supply
Quality health care
Financing
low
low
Delivery
low

15. The need for an alternative approach
There are good reasons to involve government in health care:
Efficiency concerns: market failures, externalities
Equity concerns/ social justice: health (care) as a human right
However, preconditions for state-led model to work are not met in Africa:
Reasonable level GDP/capita: sufficient domestic government resources
State capacity to enforce means-tested contributions for health care and actually deliver services nation-wide
Innovative approaches to healthcare development are needed

16. How to use donor money in such a way that:
The role of donor funding
How to use donor money in such a way that:
the total amount of financial resources in the health system increases, and
access to quality basic health care among low-income people is increased?

17. The role of donor funding
Strategies that avoid crowding out effects and reduce out-of-pocket expenses
Set up voluntary risk pooling and prepayment for low-income groups
Channel private out-of-pocket payments into risk pools
Those who can pay do pay
In tandem with boosting supply chain
No supply, no prepayment
Telecom industry: low-income people do prepay when the service is good

18. Alternative model: a virtuous circle of health care
HIF
Dutch gov
100 mln
World Bank
5 mln
MCF
2 mln
IFHA
50 mln
USAID
20 mln
Demand
Out-of-pocket
Access to health care
Ownership
Solidarity
Supply
Quality
Efficiency/ cost
Risk/ investment
Data
Financing
Demand:
Out-of-pocket expenses – down
Empowerment – up
Utilization - up
Supply:
Quality - up
Efficiency - up
Invest risk - down
Actuarial data (transparency) - up
Delivery
Patient
Empowerment
Willingness to pay
User premium contributions
2-3 mln

19. Example Hygea (Nigeria)
Supply side: Reduced risk and increased investment
Reduced investment risk due to collateral arrangement consisting of long-term donor commitment through HIF.
This made it possible for insurer to attract new debt and private equity investments:
Debt capital:
Reduction cost of debt capital by two-thirds
FMO/IFC inserted significant new debt capital
Private equity:
IFHA significant minority share in insurer
Few years later significant capital from venture capital fund Mo Ibrahim
Total amount of money in the value chain increased 10 times