Financing health systems
Health financing must mobilize the resources necessary to implement prevention measures and medical care in order to meet the needs of the population. It is clear that resources available from households, public authorities or third-party payers are severely lacking in developing countries. A priority objective is to increase them but this can only be envisaged together with improving healthcare delivery which itself alone can make people feel like seeking treatment.
Issues in financing health systems
In Least Developed Countries (LDCs) health financing is severely lacking. Total health expenditure (including international aid) stands at about US$27 per person per year. This figure, compared with the Commission on Macroeconomics and Health and WHO Minimum Package of Health cost, should be tripled which shows the extent of requirements.
In addition, health expenditure is mainly paid for by households (60% of expenditure in Sub-Saharan Africa and 76% in South Asia is from private sources) and only a small amount is collectivized. This deeply non-egalitarian system has considerable health and economic consequences for households which must abandon or postpone treatment. They are extremely vulnerable faced with overwhelming expenses and can fall into the poverty trap overnight.
This alarming situation underlines the pressing need for an increase in ODA for health. Public resources devoted to the health sector have recently begun to rise (“fiscal space”) in the framework of debt cancellation and due to sectoral resource reallocations.
However, increasing resources is not enough: poor management of available financing and, more generally, poor governance of health systems often compromise the effectiveness of expenditure. In many developing countries the State does not fulfill its role in terms of establishing a hierarchy for objectives, planning financial needs (definition ofmedium term expenditure frameworks), management and allocation of resources and guaranteeing equity in access to healthcare. Moreover, many countries have not managed to eradicate the development of corruption in the sector which sometimes takes place regardless of ethics and medical codes of ethics. As a result, healthcare delivery does not meet needs in terms of quality and quantity.
In Middle Income Countries (MICs) average total health expenditure is respectively in the region of US$94 and US$308 per capita per year for country groups with middle or higher income. The proportion of public expenditure in total health expenditure is higher than in LDCs. However, in some MICs health expenditure is very unevenly distributed and some populations can live in health conditions equivalent to those observed in LDCs. Moreover, social security systems may be more developed in these countries (respectively 36% and 53% of public expenditure for health) but they must be strengthened, especially due to the increase in health costs stemming from the development of chronic diseases.
AFD, in addition to financing health systems through a sectoral approach, bases its strategy on extending social protection systems.
More and more governments use compulsory or voluntary health insurance as an alternative financing method to “fee for service” which is not considered equitable. Health insurance, as well as improving access to healthcare for subscribing households, gives a strong incentive to structure and strengthen healthcare delivery (contractual negotiations, securing resources for the service provider etc.). Through its mutualist component users participate in managing their own health. It is however of no use to the poorest households which must benefit from specific protection systems.
In MICs government efforts are mainly directed towards developing compulsory systems or implementing universal health coverage systems. On the other hand, in LDCs, where the informal sector is much less developed, interventions target more voluntary health insurance (microinsurance) with notably the active support of French and German cooperation, the International Labour Organization and the World Bank. Occasional initiatives have also been developed to provide methodological support to microinsurance operators with upgrading to allow them to share experiences and capitalize on outcomes.
AFD would be willing to support the development of risk-sharing systems by countries (compulsory or voluntary insurance). Moreover, in view of the weakness of public health services and the population’s lack of confidence in them, particularly in LDCs, AFD projects always seek to combine the development of health insurance with the strengthening of healthcare delivery by service providers contracted through the insurance.
Finally, the GIP SPSI, a public interest group for health and social protection in the international arena, contributes through strategic monitoring to improving knowledge on different compulsory or health insurance systems and solutions provided by governments.