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Tuesday, October 27, 2020

Health financing: Creating fiscal space for health to achieve Universal Coverage

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By Yaya Barjo

The concept of Universal Health Coverage (UHC) has become a critical policy agenda across many Low and Medium Income Countries (LMICs) and the Gambia is no exception. Public policy makers from wider spectrum are occasionally faced with monumental challenges as to the feasibility, design and structure of this all important health policy which is seen as citizens’ rights. Arguably, no country on record has achieved UHC objectives in its entirety, hence nations move toward achieving the concepts and the level of achievement vary from country to country with poor nations at the brunt of struggling to realize its ideals.

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In this article, we will share with our readership the concepts of UHC and how health financing strategies help towards achieving it. By and large, the discussion will center on health financing in LMICs as they move towards achieving the lofty ideals of universal health coverage which has no longer become a request but a demand from citizens. It will interest our revered readers to note that UHC is embedded in SDG health goal and further contributes to achieving other goals such as poverty reduction, hence all countries are duty bound to embrace it.

But what does this great concept of UHC means? World Health Organization report 2010 succinctly defined UHC as thus, “provide all people with access to needed health services (including prevention, promotion, treatment, rehabilitation, and palliation) of sufficient quality”. The definition further stressed that the provision of these services should not expose the user to financial hardship. This makes health financing critical in achieving the UHC concepts. UHC has three outstanding goals—equity in service use (reduce gap between need and utilization), quality (sufficient to make a difference), and financial protection for all regardless of status.

However, to achieve these goals, countries need to pursue certain reform agendas in their health care dispensation which health financing strategies/or arrangements become an integral part. But one may be tempted to ask how health financing arrangements can influence progress towards UHC? Well a vibrant health governance structure helps coordinate health financing functions like revenue raising, pooling and purchasing. The benefits of these functions can help attain UHC intermediate objectives such as equity in resource distribution; efficiency; and transparency and accountability as well as its final coverage goals which are reduced gap between health care need and utilization; financial protection and equity in finance; and quality health service delivery for all.

es to the first function of health financing—revenue raising which has direct bearing on fiscal space. Since ministries of finance are custodians of national budgets, government role in health financing cannot be overemphasized as allocations to the health sector (with all other things remain constant) should reflect modest growth as national income grows. This is critical because countries with a higher share of government health financing often have more equitable financing and health services utilization and as well lower levels of catastrophe health spending. This simply means that increased government spending on health has an inverse relation with out-of-pocket expenditure as high government spending is associated with less household expenditure on health.

To create budgetary room for increasing government spending for health without jeopardizing macroeconomic and fiscal stability (fiscal space for health) has the potential to achieve UHC and other health sector objectives, hence the need for such a paradigm shift in public sector budgeting. This is also in tandem with the Abuja Declaration for countries to allocate 15% of their national budget to health as well as the Commission on Macroeconomics and Health (CMH, 2001) which recommends that countries should spend between 34 to 40 dollars per capita per annum to give a basic package of health care services the cost of which stands at a staggering 4.5 billion dalasi in the Gambia. For Chatham House, countries should spend 84 dollar per capita per annum in order to deliver basic care packages for all and sundry. Interestingly, most low and middle income countries trailed behind these internationally agreed recommendations.

It’s therefore imperative to note that for governments to ensure better access to essential health services and financial protection requires stable, sufficient, and long-term public financial resources, raised in a predictable, equitable, and efficient manner that minimizes distortions in the rest of the economy. Real per capita health spending in low- and middle-income countries has been growing steadily, but the government share in health spending and the share of health in the government budget has stagnated in most countries. Low revenue-generating capacity, low prioritization of health, and other factors often account for low levels of government spending, and constrained fiscal space for health in many low-income countries.

Fiscal sustainability of governments and health systems is therefore a constraint that governments have to manage within overall, and in the health system in particular.
Since it has been agreed that additional government spending on health can undoubtedly help countries to move towards achieving UHC, the question often asked is that does the governments have the fiscal space to increase health spending enough to meet UHC objectives (intermediate and final goals)?
First and foremost, lest explore the sources of fiscal space and how countries, particularly LMICs struggle to create fiscal space amidst meagre revenue base.

Additional revenues can be raised through tax measures or by strengthening tax administration. This can be achieved either by increasing tax rate or tax base. Governments can decide to increase taxes with a view to maximizing revenue and consequently use it to create fiscal space. Also low priority expenditures can be cut in order to make room for more desirable ones, example foreign travels. Another way of increasing revenue is by borrowing either from domestic or external sources. Domestically, government can issue bonds and other securities to get money from people or institutions to finance its development projects. Fiscal space may further be obtained if a government receives grants from outside sources such as from its multi and bilateral partners. Seigniorage (profit made by government by printing money to finance public programmes) is another way of raising revenue for the country. Finally but not the least, government may reprioritize expenditures which may involve cutting back spending on certain sectors for instance defense/ or internal security and embassy expenses, as well as actions to address overstaffing or to weed out ghost workers are other policy measures employed to garner resources to create fiscal space.

Now, having highlighted various revenue sources for governments to leverage on for creating fiscal space, we will now interrogate ourselves what factors can affect priorities for health from the pooled resources? Rigidities in budget making process can more often than not leads to areas of unproductive and inequitable spending decisions. But the key factor here is political commitments which have far fetching ramifications on any spending decisions for health. Another important question that comes to mine is, what can health sector policy makers do to woo favours from government spending patterns during budgeting? Dialogue about realistic macroeconomics/fiscal scenarios and resource envelops should be strengthened at the policy level.

 

During negotiations for fiscal space, health authorities should have in place a robust health sector roadmap with clear priorities and implementation steps; a realistic estimates of resource requirement; and a commitment to achieve measurable outputs/outcomes and with accountability for results.
Our subsequent publications will delve into identification of specific areas of the national budget that can be reallocated to health to ensure adequate resources for the sector commitments.
Yaya Barjo is a Health Economist
He works at the directorate of planning
& information, Ministry of Health and Social Welfare.

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