Public Expenditures Review in Health

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Public Expenditures Review in Health

• Agnes Soucat, Lead Economist

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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 ?

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Why investing in health ?

• Objectives of the health sector and role of the
  government

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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

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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

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Priority areas for public financing in health
Market Failures Redistribution
Health outcomes Pure public goods Merit high externalities goods Poor have worse health outcomes
Income protection Insurance market eg adverse selection Poor are more exposed to financial consequences of illnesses
Responsiveness and accountability Poor have less voice to influence policy decisions
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Specificity of the health sector

• Outputs are health sector specific but outcomes
  are multisectoral
• Levels are intricated
• Multiplicity of outputs

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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
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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

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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

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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 ?

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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?

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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
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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?

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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

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Contribution to Economic Growth and Poverty
Reduction ..
Improvements in health and economic take-off
changes in Per Capita GDP and IMR in
Singapore
Per capita GDP 1990
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Contribution to Economic Growth and Poverty
Reduction ..
IMR at the time of Economic Take-off in East Asia
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Contribution to Economic Growth and Poverty
Reduction ..

• Nutrition in agriculture based economies
• Some diseases HIV, malaria
• Child mortality, fertility reduction associated
  with high investment in education and low
  dependency ratios

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Allocative Efficiency
Programmatic allocation Rwanda
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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?

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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)

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Technical Efficiency
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Technical Efficiency
Relative allocation to levels of care Mauritania
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Inter-country comparison measles immunization
vs public expenditures
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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?

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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 salaries crowding out
  other inputs, non salary recurrent recycled
  into staff incentives)

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Evolution of health budget Mauritania
Input Efficiency
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Input Efficiency

• Evolution of health budget Rwanda

Budget of the Ministry of Health by nature of
Expenditures
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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

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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

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Physical Access to Essential Health Services,
Mauritania, 1999
Richer
Poorer
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Availability of Nurses and Infant
Mortality-Cameroon 1999
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Availability of Essential Drugs per Region,
Mauritania, 1999
Poorer
Richer
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BIA India ExampleWho Gets the Public Subsidy?
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Population covered by publicly funded health
insurance, Thailand 2000
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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 ?

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Private spending equals or exceeds public
spending in SSA
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Donors are a major source of funding in some
countries
Financing sourcesRwanda
Financing of health services
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Lack of Predictability of Donor Assistance
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Tax finance doesnt guarantee poor do well
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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 ?

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Ethiopia MDGs Needs Assesment total
incremental cost per capita 2005-2015

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Expected impact of key interventions on under
five mortality rate, Ethiopia 2005- 2015
Estimated U5 mortality reduction by 2009 is 48
and 61 by 2015 . MMR 36
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Government Health Expenditures as a Percent of
GDP Needed for a 34 Per Capita CMH Recommended
Package of Services
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Cost of scaling up health services incremental
cost per capita 2005-2015 for reaching the MDGs
Scale Up Strategy Health Outcomes MDGs 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
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Prediction on achieving MDG for child survival in
Ethiopia
Deaths per thousand births
Achieving the Health extension/outreach service
targets
Achieving the family/community based service
targets
Achieving the clinical based service targets
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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