In this paper, the authors consider how best to promote financial protection and access to needed health care for those outside the formal employment sector through prepayment funding, with a particular focus on the African context. The authors reviewed literature on alternative domestic prepayment funding mechanisms in relation to the three dimensions of universal coverage: population coverage, service coverage and cost coverage. Key messages from their review are the challenges of contribution arrangements for this population, even where legal provisions make membership mandatory. The authors recommend that additional health financing arrangements to cover poor and vulnerable groups (e.g. tax funding and innovative financing approaches) are adequately explored in terms of the principles of fair financing. This should be done before countries move towards implementing contributory schemes for those outside the formal sector which, as indicated in this review, have limited capacity to offer adequate financial risk protection to their members.
Resource allocation and health financing
Africa has enjoyed a growth momentum since 2000 after the wasted years of the 1980s and much of the 1990s. However, eradicating poverty will require huge resources, which existing funding strategies will be unable to generate. Global commodity prices have fallen sharply; capacity to mobilise domestic revenues is waning; and aid has been insufficient in plugging funding gaps. Revenue bargains in which states extract revenues from citizens in exchange for investments that impact positively on well-being may be key to financing Africa’s development. They can substantially increase revenues, nurture effective state-citizen relations, force companies to pay correct taxes, push fragmented systems of service provision in the direction of universalism, improve policy space and make aid more effective.
Increasing fiscal space is argued to be important for health sector public financing. One strategy is to mobilize additional government revenues through new taxes or increased tax rates on goods and services. The authors illustrate how countries can assess the feasibility and quantitative potential of different revenue-raising mechanisms. The processes and results from country assessments in Benin, Mali, Mozambique and Togo are reviewed and synthesized. The studies analysed new taxes or increased taxes on airplane tickets, phone calls, alcoholic drinks, tourism services, financial transactions, lottery tickets, vehicles and the extractive industries. Study teams in each country assessed the feasibility of new revenue-raising mechanisms using six qualitative criteria. The quantitative potential of these mechanisms was estimated by defining different scenarios and setting assumptions. Consultations with stakeholders at the start of the process served to select the revenue-raising mechanisms to study and later to discuss findings and options. Exploring feasibility was essential, as this helped rule out options that appeared promising from the quantitative assessment. Stakeholders rated stability and sustainability positive for most mechanisms, but political feasibility was a key issue throughout. The estimated additional revenues through new revenue-raising mechanisms ranged from 0.47–1.62% as a share of general government expenditure in the four countries. Overall, the revenue raised through these mechanisms was small. The authors advise countries to consider multiple strategies to expand fiscal space for health.
How has AIDS affected development in the world's poorest regions? How can we reduce the devastation caused by the epidemic? The Zimbabwe-based NGO, SAfAIDS, examined the impact of HIV in Southern Africa where the disease affects a quarter of the adult population. The AIDS epidemic is assuming crisis proportions in the region and is reversing advances made against poverty and under-development. As the cost of care for people with AIDS escalates, donors find it difficult to provide adequate funding for support and care efforts. Communities have a critical role to play in looking after the sick.
Policy implementation in the context of health systems is generally difficult and the Kenyan health sector situation is not an exception. In 2005, a new health sector strategic plan that outlines the vision and the policy direction of the health sector was launched and during the same year the health sector was allocated a substantial budget increment. On basis of these indications of a willingness to improve the health care system among policy makers, the objective of this study was to assess whether there was a change in policy implementation during 2005 in Kenya.
The European Union (EU) is currently negotiating the budget for the European Development Fund (EDF) for 2014-2020. The EDF is the EU’s main instrument for delivering development aid to the 78 African, Caribbean and Pacific (ACP) countries under the ACP–EU Cotonou Partnership Agreement. This paper reviews the EDF’s performance against three critiques made by some Member States: the EDF targets middle-income countries (MICs) at the expense of a focus on poor countries; the EDF is inflexible in its procedures and unable to adapt quickly to changing circumstances; and the EDF suffers from weak forecasting and slow disbursement of funds. The author argues that the EDF has a strong focus on poor countries and takes into account other criteria beyond income, like vulnerability and fragility. This focus will become stronger with further differentiation in aid allocation. In terms of flexibility, the EDF continues to face the challenge of being flexible enough to re-programme funds and to respond to crises, whilst at the same time ensuring long-term funding to strengthen security, development and humanitarian links. In terms of slow disbursement, the EU has started to address some of the weaknesses regarding disbursement by boosting staff levels and expertise.
Responding to the Organization for Economic Co-operation and Development’s (OECD) predictions that 2010 will see overseas aid stand at $21bn lower than promised, Head of Oxfam Campaign, Emma Seery observed that the missing $21 billion could pay for every child to go to school, and could save the lives of 2 million of the poorest mothers and children, "making this failure of the richest countries nothing short of a scandal". Oxfam estimates it would cost $16bn each year to ensure that every child gets the chance to go to school and $5bn would provide improved medical care that would save the lives of about 2 million mothers and children. ‘Rich countries have no excuse for failing to deliver the aid increases they promised’, she added. Collectively the EU-15 who are members of the OECD will miss their 0.51% aid target they committed to in 2005, with OECD projections putting them at just 0.48% average in 2010. Nine out of ten Europeans believe strongly that their leaders must meet their aid promises, despite the economic downturn, according to a recent Eurobarometer study.
For the past ten years, the South African government has not adjusted the means test for patients using public hospitals, leaving more and more poor people without medical aid to foot their own bills, according to this article. In addition, treatment and hospital fees have risen by up to 75% since the means test was first set in 2002. As a result, many families that have had to contend with serious illness face debts that can take years to pay off. Between four and six million South Africans have no medical aid insurance and do not qualify for discounted fees at public hospitals, putting them at risk of huge medical bills. The Uniform Patient Fee Schedule policy says patients who cannot afford the fees levied according to their classification "may be reclassified" as exempt from fees "by the person in charge of the health facility", enabling hospitals to write off part or all of a patient’s debt. But many patients have neither the energy or skills to navigate the bureaucracy, and staff do not always verify patient claims, leaving the process open to corruption. In the long run, the state’s plans to introduce National Health Insurance (NHI), which would be free at the point of service, should do away with the financial burden facing public sector patients, the author argues. But in the short term, the NHI plan could inadvertently make things worse. This is because the NHI pilot project includes funding to improve hospitals’ revenue collection. If that aspect of the project is not carefully managed, more patients could find themselves in severe financial straits.
South Africa intends implementing major reforms in the financing of healthcare. Free market reforms in private health insurance in the late 1980s have been reversed by the new democratic government since 1994 with the re-introduction of open enrolment, community rating and minimum benefits. A system of national health insurance with income cross-subsidies, risk-adjusted payments and mandatory membership has been envisaged in policy papers since 1994. Subsequent work has seen the design of a Risk Equalisation Fund intended to operate between competing private health insurance funds. This paper outlines the South African health system and describes the risk equalisation formula that has been developed. The risk factors are age, gender, maternity events, numbers with certain chronic diseases and numbers with multiple chronic diseases. The Risk Equalisation Fund has been operating in shadow mode since 2005 with data being collected but no money changing hands. The South African experience of risk equalisation is of wider interest as it demonstrates an attempt to introduce more solidarity into a small but highly competitive private insurance market. The measures taken to combat over-reporting of chronic disease should be useful for countries or funders considering adding chronic disease to their risk equalisation formulae.
The global financial transaction tax (FTT) is a key proposal that civil society campaigned for at the G20 Cannes Summit, hosted in Cannes, France, from 3-4 November 2011. It has the potential to raise billions of dollars to support social justice goals – estimates of the amount that FTT could generate range from about US$50 billion to as much as $250 billion if a wide range of transactions are included. The author identifies seven global taxes that could be included as ‘further transactions’. 1. A tax of 5% on First and Business class air tickets already funds UNITAID, and raises US$200 million annually – if generalised, it could raise $8 billion globally. 2. A tax on polluting activities, amounting $20-25 for every ton of CO2 would raise $300 billion, while taxation of air and sea international transportation could raise US$40 billion. 3. An additional tax on top of national taxes on transnational societies would eliminate tax havens and would turn these companies into global tax payers, thereby raising $100 billion. 4. A tax on arm sales could garner US$30 billion a year. 5. A tax on capital profits could amount to US$50 billion if it was generalised, if it covered all tax havens and if it was controlled. 6. The tax on currency exchange transactions limited to a rate of 0.005%, and applied to principal currency exchange markets (US$, pound and yen) would generate at least US$33 billion – if increased to 0.1%, this tax would raise $150-300 billion, as well as becoming an efficient instrument against rampant speculation. 7. A tax of $0.05 on every pack of cigarettes in rich countries (and of $0.01 in poorest countries) would raise an additional $7.7 billion.