This presentation by Akiko MAEDA and Cheryl CASHIN was made at the 3rd Joint DELSA/GOV Health Meeting, Paris 24-25 April 2014. Find out more at www.oecd.org/gov/budgeting/3rdmeetingdelsagovnetworkfiscalsustainabilityofhealthsystems2014.htm

1. The Macroeconomic and Fiscal Context for Health Financing
Policy
Informing the Dialogue Between Ministries of Health and Ministries of Finance in
Low- and Middle-Income Countries
Akiko Maeda
Cheryl Cashin
3rd MEETING OF THE JOINT NETWORK ON FISCAL
SUSTAINABILITY OF HEALTH SYSTEMS
24-25 April 2014 OECD Conference Centre, Paris, France
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2. 2
World
Bank
Goals
End
Extreme
Poverty by
2030
Boost
shared
prosperity
Financial Protection
No one should be impoverished due to out-of-pocket expenditures.
Service Coverage
All communities and individuals, especially the bottom 40%, should receive the quality
health services they need through the life cycle and be protected from public health risks.
Healthy Societies
Promoting investments that are the foundation of health societies, e.g., water &
sanitation, agriculture, education, social protection, transport, gender, environment, etc.
Universal
Health
Coverage
World Bank Goals and Universal Health Coverage

3. Health Financing and UHC
Universal health coverage (UHC)
requires adequate financial
resources to pay for state-
guaranteed health services.
These resources need to be:
• Pooled effectively to provide
financial protection
• Redistributed to maintain
equity
• Collected and used efficiently
and equitably
3
• Out-of-pocket
payments tend to be
the largest revenue
source in low-income
countries
• Government budget is
a significant source of
pooled revenues, and
it plays a key role in
leveraging policy for
achieving health sector
goals.

4. Key Issues for MOH-MOF Dialogue in Low
and Middle Income Countries
4
Severe
macroeconomic
and fiscal
constraints
• Narrow tax base
and low rate of
collection
• New revenue
for the health
sector may be
substitutive
Stated priorities
not always
reflected in
budget
allocations
• Budget
allocation does
not always
follow National
Plans/MTEF
• Rigidities in the
budget
Budget formation,
execution and
reporting process
is a source of
inefficiency
Historical, line-item
budgeting makes it
difficult to match
expenditure with
priority services
Inefficiencies in
health spending
coexist with the
need to increase
spending
Scope for efficiency
gains exist within
the health sector,
but it will take time
and multi-faceted
investment to
realize these gains
Health SpendingRevenue for Health

5. Key Issues for MOH-MOF Dialogue in Low
and Middle Income Countries
5
Severe
macroeconomic
and fiscal
constraints
• Narrow tax base
and low rate of
collection
• New revenue
for the health
sector may be
substitutive
Stated priorities
not always
reflected in
budget
allocations
• Budget
execution does
not always
follow National
Plans/MTEF
• Rigidities in the
budget
Budget formation,
execution and
reporting process
is a source of
inefficiency
Supply-side / line-
item budgeting
makes it difficult to
match expenditure
with priority
services
Inefficiencies in
health spending
coexist with the
need to increase
spending
Scope for efficiency
gains exists within
the health sector,
but it will take time
and multi-faceted
investment to
realize these gains
Health Spending
Scope for cooperation between
MOH and MOF
Revenue for Health

6. Ghana’s Experience
6
Ghana is a west African
country with a population
of ~25 million
Per capita GDP = $1,150
(2010)
Life expectancy = 65 years

7. Ghana’s Experience
7
Total Health Expenditure = $54/person
16%
National
Health
Insurance
Scheme
40%
Ministry of Health
Budget
44%
Out-of-Pocket

8. Ghana’s Experience
8
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
2009 2010 2011 2012 2013 2014 2015
ProjectedGovernmentHealthExpenditure(nominalinmillionsGhC)
Improvement in
revenue collection
General economic
growth
Actual
Economic growth
has been robust,
but
improvements in
government
revenue
collection are
critical.
Macroeconomic and Fiscal Context

9. Ghana’s Experience
9
Share of total
government budget
allocated to health
has stagnated even
while new earmarked
revenue source added
and economic growth
has been strong.
Health as % of total government budget
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
NHIS started Ghana achieved lower-
middle income status

10. Ghana’s Experience
10
NHIS funds are
transferred to extra-
budgetary fund so can
be spent flexibly.
But often not
transferred on time,
causing arrears and
interest charges.
Rigidities in public financial management
54%
4%
38%
4%
Salaries Administration Service Investment
MOH line-item
budget

11. Ghana’s Experience
11
Inefficiencies and unproductive cost grown
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
2005 2006 2007 2008 2009 2010 2011
VAT SSNIT Investment Income Premiums Other Grants
Ghana ‘s NHIS has achieved a growing and
diversified revenue base
0
100000000
200000000
300000000
400000000
500000000
600000000
700000000
2005 2006 2007 2008 2009 2010 2011
Revenue Claims
But claims per member is growing faster than
revenue
NHIS expenditure/member is increasing >
30%/year
Without increase in population coverage,
benefits or utilization

12. Guidance Note on the Macroeconomic and Fiscal
Context for Health Financing Policy in LMICs
Objective: to inform the dialogue between Ministries of Health
and Ministries of Finance in support of Universal Health Coverage.
The Guidance Note:
• Outlines the key components of the macroeconomic, fiscal, and
public financial management context that need to be
considered for an informed health financing discussion at the
country level.
• Is organized around 4 sets of questions to help structure the
policy dialogue firmly in the context of a country’s
macroeconomic and fiscal context.
• Points to analytical tools that are available to assist in answering
these questions for a specific country.
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13. Guidance Note on the Macroeconomic and Fiscal
Context for Health Financing Policy in LMICs
Key Areas for MOH-MOF Health Financing Policy Dialogue
HealthSector
Revenue
1. Realistic government health spending projections
given macroeconomic and fiscal constraints.
2. Realistic opportunities to re-prioritize within the
budget
Health
Expenditure
3. Opportunities and constraints to better align
health spending with health system objectives
4. Efficiency of current health expenditure patterns
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14. Sample tool: World Bank Macro-fiscal context and health
financing factsheets
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15. THANK YOU!
amaeda@worldbank.org
ccashin@r4d.org
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