What Are Governments Spending On Health In East And .
Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedHealth Systems & ReformISSN: 2328-8604 (Print) 2328-8620 (Online) Journal homepage: http://www.tandfonline.com/loi/khsr20What Are Governments Spending on Health in Eastand Southern Africa?Moritz Piatti-Fünfkirchen, Magnus Lindelow & Katelyn YooTo cite this article: Moritz Piatti-Fünfkirchen, Magnus Lindelow & Katelyn Yoo (2018) What AreGovernments Spending on Health in East and Southern Africa?, Health Systems & Reform, 4:4,284-299, DOI: 10.1080/23288604.2018.1510287To link to this article: shed with license by Taylor & FrancisGroup, LLC 2018 International Bank forReconstruction and Development / TheWorld BankAccepted author version posted online: 25Sep 2018.Published online: 30 Oct 2018.Submit your article to this journalPublic Disclosure AuthorizedArticle views: 576View Crossmark dataFull Terms & Conditions of access and use can be found tion?journalCode khsr20
Health Systems & Reform, 4(4):284–299, 2018Published with license by Taylor & Francis Group, LLCISSN: 2328-8604 print / 2328-8620 onlineDOI: 10.1080/23288604.2018.1510287Research ArticleWhat Are Governments Spending on Health in Eastand Southern Africa?Moritz Piatti-Fünfkirchen*, Magnus Lindelow, and Katelyn YooHealth Nutrition and Population Global Practice, World Bank Group, Washington, DC, USACONTENTSIntroductionDefinitions, Data, and MethodsMuddying the Waters: Issues in Analyzing Government HealthExpendituresConclusionReferencesKeywords: Abuja target, Africa, expenditure measurement, health expenditure, health financingReceived 30 April 2018; revised 18 July 2018; accepted 6 August 2018*Correspondence to: Moritz Piatti-Fünfkirchen; Email: mpiatti@worldbank.orgColor versions of one or more of the figures in the article can be found onlineat www.tandfonline.com/khsr. 2018 International Bank for Reconstruction and Development / The World BankThis is an Open Access article distributed under the terms of the Creative CommonsAttribution License (http://creativecommons.org/licenses/by/4.0/), which permitsunrestricted use, distribution, and reproduction in any medium, provided the originalwork is properly cited.284Abstract—Progress toward universal health care (UHC) in Africawill require sustained increases in public spending on health andreduced reliance on out-of-pocket financing. This article reviewstrends and patterns of government spending in the East andSouthern Africa regions and points out methodological challengeswith interpreting data from the World Health Organization’s (WHO)Global Health Expenditure Database (GHED) and other sources.Government expenditure for health has increased for most countries, albeit at a slower rate than gross domestic product (GDP). Inmost countries there has been a prioritization away from health ingovernment budgets, putting the onus on the private sector anddonors to fill the gap. Donor support is important in the region butreliance on external spending is not consistent with countries’ statedambitions of universal health coverage.A number of methodological challenges with estimating healthexpenditures are identified. Capturing health expenditures adequately across agencies and levels of decentralization can bechallenging, and off-budget funds and arrears are evasive.Measurement error can be significant because actual expenditureinformation can be hard to come by and is often dated andunreliable. Furthermore, how external financing is captured willaffect government health expenditure estimates. These factorshave contributed to differences in expenditure estimates betweenthe WHO GHED and country-specific public expenditure reviewsand complicate interpretation. The article concludes that it iscritical to strengthen national data capacity and internationalefforts to promote quality and consistency of data. The GHEDis an invaluable resource for monitoring and benchmarking healthexpenditures. It is best used in combination with deep dive country expenditure assessments.INTRODUCTIONProgress toward universal health coverage (UHC) and theSustainable Development Goals (SDGs) will not beachieved without adequate resources. According to a recentestimate, an additional 371 billion USD will be needed per
Piatti-Fünfkirchen et al.: What Are Governments Spending on Healthyear for low-income and middle-income countries to reachthe health-related SDG targets. This would represent anincrease in health spending as a share of gross domesticproduct (GDP) from a current mean of 5.6% to a mean of7.5%, with significant financing gaps, in particular in lowincome countries.1These recent estimates follow in the vein of similar effortsduring the Millennium Development Goals era to cost theachievement of targets and identify financing gaps. For example, the Commission on Macroeconomics and Health developed estimates for the cost and financing needs to expandcoverage of a limited set of priority services.2 More recently,the High-Level Task Force on Innovative Financing forHealth Systems estimated that a total of 54 USD per capitawas needed by 2015 to achieve the health MillenniumDevelopment Goals for low-income countries, which impliedan increase of 39 USD relative to the contemporary level ofspending of 25 USD per capita.3Rallying calls for increased spending on health inevitablyraises the question of how incremental spending can befinanced. In most health systems in low- and middle-incomecountries (LMICs), out-of-pocket spending to pay for services, pharmaceuticals, and other health care costs makesup a large share of spending—estimated at 40% of totalcurrent health spending in 2015.4 It is well established thatreliance on out-of-pocket spending to finance health systemsis associated with barriers to access and higher prevalence ofimpoverishing and catastrophic health expenditures.5,6Hence, progress toward UHC in LMICs will require a transition in financing, away from out-of-pocket payments towardmandatory prepayment (taxes, other government revenues,and statutory health insurance) as the main form of domesticfinancing for health care.Several efforts have been made to estimate levels of government spending required to make considerable progress towardUHC. The 2010 World Health Report6 suggests that broad-basedaccess to a core set of services and effective financial protectionrequires government spending on health in the region of around5%. McIntyre and Metheus reach a similar conclusion based onupdated analysis of patterns of spending, service coverage, andoutcomes.7 This is a long way from current levels of domesticgovernment spending in LMICs (1.4% and 2.5% of GDP in 2015,respectively). Some targets have also been established for theshare of government budgets dedicated to health. Most notable,African heads of state committed in 2001, through the AbujaDeclaration, to allocate at least 15% of their annual budget toimprove the health sector.8The analytic foundations for government health expendituretargets have been questioned on numerous grounds. Savedoffnoted that there is no “right” or “optimal” level of health spending285that applies across all countries and that factors such as the natureof the health challenges, policy objectives in the health sector,health system efficiency, fiscal capacity, and competing demandson public resources need to be considered.9 Along similar lines,Jowett et al. make the point that there is wide variation in coverageand outcomes at any level of government health spending, suggesting that, although the level of government spending is important, other factors also come into play in determining healthsystem performance.10Even if there is no “magic” target for government healthspending, robust data and monitoring of government healthspending are critical. Levels of government spending on health—in absolute terms and as a share of GDP and overall budget—indicate government commitment to health. These data can beused to benchmark with peer countries and monitor changes overtime. Moreover, in the context of sub-Saharan Africa (SSA),where an explicit target for government health spending hasbeen established, data are needed to assess progress toward thistarget. This is particularly important given concerns that development assistance for health displaces government spending,11,12longstanding concerns about the sustainability of developmentassistance for health in Africa, and recent commitments under theAddis Ababa Action Agenda to increase domestic resource mobilization to finance government services.13Against this backdrop, this article aims to provide anoverview of levels of government spending on health inEast and Southern Africa (ESA). It starts by outlining keyissues relating to the definition of government spending andthen presents summary data from the World HealthOrganization’s (WHO) Global Health Expenditure Database(GHED), which has long been the primary source of comparative analysis of government spending.4 The article discusses challenges that arise with interpreting the data. Theauthors draw on public expenditure reviews for selectedcountries to explore methodological and data issues in theanalysis of government health expenditures.DEFINITIONS, DATA, AND METHODSThis article uses the revised System of Health Accounts 2011(SHA 2011) framework for concepts and definitions anddraws primarily on the WHO GHED to analyze spendingtrends and patterns in the ESA region.1 An overview of thedata is provided in the Data Annex. The GHED is a data setthat provides health expenditure estimates for 190 countriesfrom the year 2000 onwards and follows the SHA 2011health expenditure accounting framework.4 As defined inSHA 2011, health expenditures are considered to include“all activities with the primary purpose of improving, maintaining and preventing the deterioration of the health status of
286Health Systems & Reform, Vol. 4 (2018), No. 4persons and mitigating the consequences of ill-health throughthe application of qualified health knowledge” (p.52).14Estimates on financing sources and arrangements (i.e.,financing schemes2) are used to review trends and patternsin government financing and expenditures on health inESA, including the role of development assistance forhealth. Domestic general government health expenditures(GGHE-D) are considered to include transfers from government domestic revenue (FS.1), social insurance contributions (FS.3), and compulsory prepayment (FS.4).15Transfers from government domestic revenue include intragovernmental transfers in terms of budgetary allocations,transfers by government on behalf of specific groups (e.g.,government may buy voluntary insurance covering thecopayment for the poor), subsidies (e.g., subsidies forcompulsory health insurance schemes managed by privatecompanies), and other transfers (e.g., in-kind transfers andtransfers to nonprofit institutions). Social insurance contributions are receipts3 that secure entitlement to social healthinsurance benefits. Any contributions or subsidies fromgovernment on behalf of specific groups are excluded toavoid double counting. Compulsory private insurance premiums are payments that have been mandated by government and secure entitlement to benefits.14 Estimates ofGGHE-D therefore do not include support from externalsources, such as direct foreign transfers (FS.7) and transfers distributed by government from foreign origin (FS.2).These are categorized separately from GGHE-D and considered as overseas development assistance for health. Thisarticle uses estimates of recurrent expenditure4 for theanalysis because they are more consistent over time anddrive the provision of services today, whereas capitalexpenditures finance the accumulation of assets requiredfor future service delivery. The ratio of capital to recurrentexpenditures in the SSA region is on average 1:8, withcapital expenditures accounting for 1.7% of general government expenditures (GGEs) and recurrent expendituresaccounting for about 6.8% of GGE. Throughout the article,average figures over a three-year period, rather than latestyear available, are reported to minimize annual fluctuation.The article also draws on a repository of health sectorpublic expenditure reviews (PERs),16–26 which are fieldbased in-depth assessments of the health expenditure profile of any given country, to reflect on GHED expenditureestimates and comment on what is driving some of thedifferences observed. There are guidelines and good practice notes on PER methodology but, contrary to theSHA11, there is no single unique methodology that isfollowed in all countries.Trends and Patterns in Health ExpendituresDomestic Government Health ExpenditureIn the ESA region, GGHE-D averaged 2.3% of GDP in2013–2015. This is higher than that of peers in other parts ofSSA (the average for SSA is 1.8%) but lower than the proposedtarget of 5%.27,28,5 Government schemes are by far the largestshare of GGHE-D, making up on average 97% of total publichealth expenditures in ESA (90.1% in SSA). Social health insurance schemes make up 2.4% and 9.9% of GGHE-D, respectively.GGHE-D is positively correlated with per capita GDP,albeit with significant variation across countries (Figure 1).In terms of trends over time, GGHE-D has decreased as ashare of GDP in many countries in the ESA region, fallingfrom 2.6% to 2.3% of GDP between 2000–2002 and2013–2015. The decrease was more pronounced in lowincome countries, where the share of spending in GDP fellfrom 2.1% to 1.6% of GDP.Despite the decline in the share of domestically financedgovernment health spending in GDP and rapid populationgrowth, total per capita GGHE-D has increased in mostcountries over the last 15 years. On average in the ESAregion per capita GGHE-D has increased from 60 USD in2000–2002 to 97 USD in 2013–2015 (62% increase, compared to a 54% increase in SSA, from 30 USD to 60 USD).Both of these are, however, significantly below global percapita GGHE-D increases, which almost tripled from 271USD to 769 USD over the same time period. The rate ofincrease in per capita GGHE-D varies significantly by levelof income. Low-income countries in ESA have seen only amodest increase in per capita GGHE-D allocations from 8.7USD in 2000–2002 to 10.3 USD in 2013–2015. Healthexpenditures in countries at higher levels of income haveincreased at a significantly faster rate than that of lowerincome countries, which already allocated less toward health(Figure 2). Thus, there is a widening gap in per capita healthexpenditures across countries in the region.Domestic Resource Mobilization and Prioritization of HealthExpendituresGovernment spending on health reflects both overalldomestic resource mobilization and the degree of prioritization to health.29 Countries’ abilities to collect revenuetends to increase with the level of income as the economygets formalized. Revenue collection in ESA, excludinggrants, is around 23.3% of GDP, which is higher than theSSA average of 21.7% but below the global average of24.9%. Low- and lower-middle-income countries in theregion collect comparatively less. Madagascar, Ethiopia,and Burundi, for example, collect 10.2%, 10.9%, and13.1% of GDP in revenue, respectively (Figure 3).
Piatti-Fünfkirchen et al.: What Are Governments Spending on Health287FIGURE 1. GGHE-D as a percentage of GDP by Level of Income, Average 2013–2015. Source: WHO GHED, based on SHA 2011;World Development Indicators (WDI).FIGURE 2. Level and Change of GGHE-D per Capita. Source: WHO GHED, based on SHA 2011; World Development Indicators (WDI).
288Health Systems & Reform, Vol. 4 (2018), No. 4Similarly, budgetary allocations are positively associated withlevel of income, albeit with a lot of variation across the region.With regards to international benchmarks, Swaziland is the onlycountry in ESA that has met the Abuja target of 15% of generalgovernment expenditure in 2013–2015, with South Africa reaching close to 14%. The majority of countries, however, fall significantly behind, as shown in Figure 4.Further, recent years have seen a prioritization away fromhealth in many countries. The share of government expenditureon health is estimated to have decreased from 8.4% to 6.7% in theregion between 2000 and 2015 (Figure 5). This trend appears to bemore pronounced for low-income countries and is unique to SSAand the East Asia Pacific region. In conclusion, per capita GGHED is increasing in absolute terms, though not evenly across theregion, and has not kept pace with economic growth.Domestically financed government expenditures on health fallwell short of Abuja targets in most countries and of resourcerequirements to reach the health SDGs.External Financing for HealthThe reduction in GGHE-D as a share of GDP and governmentbudgets discussed in the previous section has in part been compensated for by the availability of donor financing. Developmentassistance is an important source for financing recurrent healthexpenditures in the region and constitutes at times 30% of totalrecurrent expenditures or more in some low-income countries. Onaverage it has increased from 22.6% to 25.5% of total recurrentexpenditures between 2005–2007 and 2013–2015. In per capitaterms, development assistance for health was 17.0 USD in ESA in2013–2015 (compared to 14.9 USD in SSA as a whole). There is,however, large variation in ESA across countries, with Swazilandand Botswana receiving 35 USD to 45 USD per capita and othercountries such as Angola, South Sudan, and Ethiopia receivingless than 5 USD per capita (Figure 6). HIV/AIDS is likely to be animportant factor driving these differences with high levels ofexternal support to high prevalence countries in Southern Africa.Especially in low-income countries, donor assistance playsa significant role and has often matched or exceededFIGURE 3. Revenue Performance (Excluding Grants) by Level of Income. Note: Revenue as a percentage of GDP used for latest yearavailable; GDP per capita average of 2013–2015. Source: WHO GHED, based on SHA 2011; World Development Indicators (WDI).
Piatti-Fünfkirchen et al.: What Are Governments Spending on Health289FIGURE 4. Budget Allocations to Health by Level of Income. Note: Revenue as a percentage of GDP used for latest year available; GDPper capita average of 2013–2015. Source: WHO GHED, based on SHA 2011; World Development Indicators (WDI).government contributions to health (Figure 7). Lu et al. estimate the extent of additionality of donor funds in the healthsector and find that for every dollar of development assistance to government, the government implicitly reducesspending from its own sources by 46 cents.30 In ESA, however, an increase in external financing has tended to beassociated with increases in government spending (reflectedby countries in the northeastern quadrant of Figure 8). Onlyin a few outlier countries such as Uganda and the Comoroshas there been a shift away from health following increaseddonor inflows. On the downside, there are a number ofcountries where both donor support and government allocations have significantly reduced, as shown in the southwestern quadrant in Figure 8.The modality through which development assistance isprovided has shifted significantly toward greater use of country systems. The share of development assistance routedthrough government channels6 has increased from 34.3% in2005–2007 to 41.3% in 2013–2015. This trend is precipitatedby donor countries signing up to the Paris accord and theAccra agreement for action in the mid-2000s, emphasizingthe importance of alignment and donor harmonization withcountry processes. There does not appear to be a clear association between countries’ levels of income and the modalitythrough which aid is provided.MUDDYING THE WATERS: ISSUES IN ANALYZINGGOVERNMENT HEALTH EXPENDITURESThe SHA 2011 provides a thorough basis for conceptualizingfinancial flows in a
East and Southern Africa (ESA). It starts by outlining key issues relating to the definition of government spending and then presents summary data from the World Health Organization’s (WHO) Global Health Expenditure Database (GHED), which has long been the primary source of com-parative analysis of government spending.4 The article dis-
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