Reconciling devolution with health financing and public financial management: challenges and policy options for the health sector.

The interplay between devolution, health financing and public financial management processes in health-or the lack of coherence between them-can have profound implications for a country's progress towards universal health coverage. This paper explores this relationship in seven Asian and African countries (Burkina Faso, Kenya, Mozambique, Nigeria, Uganda, Indonesia and the Philippines), highlighting challenges and suggesting policy solutions. First, subnational governments rely heavily on transfers from central governments, and most are not required to allocate a minimum share of their budget to health. Central governments channelling more funds to subnational governments through conditional grants is a promising way to increase public financing for health. Second, devolution makes it difficult to pool funding across populations by fragmenting them geographically. Greater fiscal equalisation through improved revenue sharing arrangements and, where applicable, using budgetary funds to subsidise the poor in government-financed health insurance schemes could bridge the gap. Third, weak budget planning across levels could be improved by aligning budget structures, building subnational budgeting capacity and strengthening coordination across levels. Fourth, delays in central transfers and complicated procedures for approvals and disbursements stymie expenditure management at subnational levels. Simplifying processes and enhancing visibility over funding flows, including through digitalised information systems, promise to improve expenditure management and oversight in health. Fifth, subnational governments purchase services primarily through line-item budgets. Shifting to practices that link financial allocations with population health needs and facility performance, combined with reforms to grant commensurate autonomy to facilities, has the potential to enable more strategic purchasing.

Addiction to a bad idea, especially in low- and middle-income countries: Contributory health insurance.

Despite limited evidence of successful development and implementation of contributory health insurance and low and middle income countries, many countries are in the process implementing such schemes. This commentary summarizes all available evidence on the limitations of contributory health insurance including the lack of good theoretical underpinning and the considerable evidence of inequity and fragmentation created by such schemes. Moreover, the initiation of a contributory health insurance scheme has not been found to increase revenues to the health sector or help health countries achieve universal health coverage. Low and middle income countries can improve equity and efficiency of the health sector by replacing out-of-pocket spending with pre-paid pooling mechanisms, but that is best done through budget transfers and not by contributory insurance that links payment to sub-population entitlements.

Public Financial Management as an Enabler for Health Financing Reform: Evidence from Free Health Care Policies Implemented in Burkina Faso, Burundi, and Niger.

In Burkina Faso, Burundi and Niger, the policy to remove user fees for primary care was carried out through significant adjustments in public financial management (PFM). The paper analyzes the PFM adjustments by stage of the budget cycle and describes their importance for health financing. The three countries shifted from input-based to program-based allocation for primary care facility compensation, allowed service providers autonomy to access and manage the funds, and established budget performance monitoring frameworks related to outputs. These PFM changes, in turn, enabled key improvements in health financing, namely, more direct funding of primary care facilities from general budget revenue, and payments to those service providers based on outputs and drawn from noncontributory entitlements. The paper draws on these experiences to provide key lessons on the PFM enabling conditions needed to expand health coverage through public financing mechanisms.

Will the Quest for UHC be Derailed?

COVID-19 has shocked all countries' economic and health systems. The combined direct health impact and the current macro-fiscal picture present real and present risks to health financing that facilitate progress toward universal health coverage (UHC). This paper lays out the health financing mechanisms through which the UHC objectives of service coverage and financial protection may be impacted. Macroeconomic, fiscal capacity, and poverty indicators and trends are analyzed in conjunction with health financing indicators to present spending scenarios. The analysis shows that falling or reduced economic growth, combined with rising poverty, is likely to lead to a fall in service use and coverage, while any observed reductions in out-of-pocket spending have to be analyzed carefully to make sure they reflect improved financial protection and not just decreased utilization of services. Potential decreases in out-of-pocket spending will likely be drive by households' financial constraints that lead to less service use. In this way, it is critical to measure and monitor both the service coverage and financial protection indicators of UHC to have a complete picture of downstream effects. The analysis of historical data, including available evidence since the start of the COVID-19 pandemic, lay the foundation for health financing-related policy options that can effectively safeguard UHC progress particularly for the poor and most vulnerable. These targeted policy options are based on documented evidence of effective country responses to previous crises as well as the overall evidence base around health financing for UHC.

Pooling financial resources for universal health coverage: options for reform.

Universal health coverage (UHC) means that all people can access health services of good quality without experiencing financial hardship. Three health financing functions - revenue raising, pooling of funds and purchasing health services - are vital for UHC. This article focuses on pooling: the accumulation and management of prepaid financial resources. Pooling creates opportunities for redistribution of resources to support equitable access to needed services and greater financial protection even if additional revenues for UHC cannot be raised. However, in many countries pooling arrangements are very fragmented, which create barriers to redistribution. The purpose of this article is to provide an overview of pooling reform options to support countries who are exploring ways to enhance redistribution of funds. We outline four broad types of pooling reforms and discuss their potential and challenges in addressing fragmentation of health financing: (i) shifting to compulsory or automatic coverage for everybody; (ii) merging different pools to increase the number of pool members and the diversity of pool members' health needs and risks; (iii) cross-subsidization of pools that have members with lower revenues and higher health risks; and (iv) harmonization across pools, such as benefits, payment methods and rates. Countries can combine several reform elements. Whether the potential for redistribution is actually realized through a pooling reform also depends on the alignment of the pooling structure with revenue raising and purchasing arrangements. Finally, the scope for reform is constrained by institutional and political feasibility, and the political economy around pooling reforms needs to be anticipated and managed.

La couverture sanitaire universelle (CSU) consiste à ce que l'ensemble de la population ait accès à des services de santé de qualité sans encourir de difficultés financières. Pour cela, trois fonctions de financement de la santé sont essentielles: le recouvrement des recettes, la mise en commun des fonds et l'achat de services de santé. Cet article s'intéresse à la mise en commun, à savoir le recueil et la gestion de ressources financières prépayées. La mise en commun permet de redistribuer les ressources afin d'offrir un accès équitable aux services nécessaires et d'améliorer la protection financière même en cas d'impossibilité de lever des recettes supplémentaires pour la CSU. Or, dans de nombreux pays, les mécanismes de mise en commun sont très fragmentés, ce qui fait obstacle à la redistribution. Cet article entend donner un aperçu des possibilités de réforme en ce qui concerne la mise en commun afin d'aider les pays qui cherchent à améliorer la redistribution des fonds. Nous présentons quatre grands types de réforme concernant la mise en commun et analysons le potentiel ainsi que les difficultés qu'ils présentent pour mettre un terme à la fragmentation du financement de la santé: (i) passage à une couverture obligatoire ou automatique pour tout le monde; (ii) fusion de différentes caisses afin d'augmenter le nombre de membres d'une même caisse ainsi que la diversité de leurs besoins et de leurs risques; (iii) interfinancement des caisses dont les membres ont des revenus faibles et des risques élevés en matière de santé; et (iv) harmonisation entre les caisses concernant, par exemple, les avantages, les modes de paiement et les tarifs. Les pays peuvent combiner plusieurs éléments de réforme. La réalisation du potentiel de redistribution grâce à une réforme de la mise en commun dépend aussi de l'alignement de la structure de mise en commun sur le recouvrement des recettes et les mécanismes d'achat. Enfin, l'étendue de la réforme est limitée par la faisabilité institutionnelle et politique, et l'économie politique relative à cette réforme de la mise en commun doit être anticipée et gérée.

La cobertura sanitaria universal (CSU) significa que todas las personas pueden acceder a servicios de salud de buena calidad sin experimentar dificultades financieras. Hay tres funciones de financiamiento de la salud que son fundamentales para la CSU: la recaudación de ingresos, la mancomunación de fondos y la compra de servicios de salud. Este artículo se centra en la mancomunación: la acumulación y gestión de recursos financieros prepagados. La mancomunación crea oportunidades para la redistribución de recursos que apoyan el acceso equitativo a los servicios necesarios y una mayor protección financiera, incluso si no se pueden recaudar ingresos adicionales para la CSU. Sin embargo, en muchos países los acuerdos de mancomunación están muy fragmentados, lo que crea barreras a la redistribución. El propósito de este artículo es proporcionar una visión general de las opciones de reforma de la mancomunación para apoyar a los países que están explorando formas de mejorar la redistribución de los fondos. Se describen cuatro grandes tipos de reformas de mancomunación y se discuten sus potencialidades y desafíos para abordar la fragmentación del financiamiento de la salud: (i) pasar a una cobertura obligatoria o automática para todos; (ii) fusionar diferentes fondos para aumentar el número de miembros del fondo y la diversidad de las necesidades y riesgos de salud de los miembros del mismo; (iii) subvención cruzada de fondos que tienen miembros con menores ingresos y mayores riesgos para la salud; y (iv) armonización entre los fondos, tales como beneficios, métodos de pago y tarifas. Los países pueden combinar varios elementos de reforma. La realización efectiva del potencial de redistribución mediante una reforma de la mancomunación depende también de la alineación de la estructura de la mancomunación con los acuerdos de recaudación de ingresos y compra. Por último, el alcance de la reforma se ve limitado por la viabilidad institucional y política, y es preciso anticipar y gestionar la economía política en torno a la reforma de la mancomunación.

Financing Common Goods for Health: A Country Agenda.

Collective financing, in the form of either public domestic revenues or pooled donor funding, at the country level is necessary to finance common goods for health, which are population-based functions or interventions that contribute to health and have the characteristics of public goods. Financing of common goods for health is an important part of policy efforts to move towards Universal Health Coverage (UHC). This paper builds from country experiences and budget documents to provide an evidence-based argument about how government and donor financing can be reorganized to enable more efficient delivery of common goods for health. Issues related to fragmentation of financing-within the health sector, across sectors, and across levels of government-emerge as key constraints. Effectively addressing fragmentation issues requires: (i) pooling funding and consolidating governance structures to repackage functions across programs; (ii) aligning budgets with efficient delivery strategies to enable intersectoral approaches and related accountability structures; and (iii) coordinating and incentivizing investments across levels of government. This policy response is both technical in nature and also highly political as it requires realigning budgets and organizational structures.

Tax-funded social health insurance: an analysis of revenue sources, Hungary.

Health financing is a complex health system function, which cannot be analysed accurately without tracking each step of the flow of funds separately. We analysed the revenue mix of the Hungarian health insurance fund from 1994 to 2015 and discuss the policy implications of our findings. We used the System of Health Accounts published in 2000 and the revised version of 2011, which introduced separate classifications for the sources of health expenditure. Based on the 2000 version, health insurance contributions were the main source of public funding in Hungary. According to the 2011 version, nearly 70% of health insurance fund revenues came from government tax transfers in 2015, illustrating the striking difference in how revenues and expenditures are reported using this version. Use of the 2011 version will better inform national policy-making and international comparisons and facilitate documentation and analysis of how countries have adapted their revenue mix to changing macroeconomic circumstances. The finding that Hungary has a predominantly tax-funded social health insurance system suggests that traditional understanding and description of health-financing models are no longer adequate and may limit consideration of potential resource-generation options. Hungary is also a good example of how separating revenue generation and pooling broadens policy options to tackle gaps in social health insurance coverage, although the government did not act on these due to the lack of a consistent health-financing strategy. The findings may be particularly relevant for low- and middle-income countries that are trying to expand social health insurance coverage despite limited formal employment.

Le financement de la santé est une fonction complexe du système de santé, qui ne peut pas être précisément analysée sans étudier séparément chaque étape du flux de fonds. Dans cet article, nous analysons le mix de recettes du fonds d'assurance maladie hongrois de 1994 à 2015 et nous évoquons les implications de nos constatations sur la définition des politiques. Nous avons utilisé le Système des Comptes de la Santé publié en 2000 ainsi que sa version révisée de 2011, qui a introduit des classifications différentes pour les sources des dépenses de santé. En se fondant sur la version de 2000, ce sont les cotisations d'assurance maladie qui ont constitué la principale source de financement public en Hongrie. Mais d'après la version de 2011, près de 70% des recettes constitutives des fonds de l'assurance maladie sont provenues de transferts fiscaux gouvernementaux en 2015, ce qui illustre la différence flagrante dans la manière d'enregistrer les recettes et les dépenses proposée par cette version révisée. L'utilisation de la version de 2011 permettra de mieux informer le processus d'élaboration des politiques nationales, de faciliter les comparaisons internationales ainsi que de mieux documenter et analyser la manière dont les pays adaptent leur mix de recettes face à l'évolution des circonstances macroéconomiques. Le fait que le système d'assurance maladie sociale de Hongrie s'avère principalement financé par l'impôt montre que la compréhension et la description habituelles des modèles de financement de la santé ne sont plus adaptées et que cela peut même entraver la considération d'autres options envisageables pour générer des recettes. La Hongrie est également un bon exemple illustrant comment le fait de séparer la génération des recettes et la mise en commun des fonds élargit les options politiques pour réduire les déficiences dans la couverture de l'assurance maladie sociale, même si le gouvernement n'a pas agi sur ce point, faute de stratégie de financement de la santé cohérente en la matière. Ces constatations peuvent être particulièrement utiles pour les pays à revenu faible et intermédiaire qui essayent d'étendre la couverture de leur assurance maladie sociale malgré un niveau d'emploi limité dans le secteur formel.

La financiación de la salud es una función compleja del sistema sanitario que no puede analizarse con precisión si no se hace un seguimiento independiente de cada paso del flujo de fondos. Se ha analizado la combinación de ingresos de la caja húngara de seguros médicos de 1994 a 2015 y se han discutido las implicaciones políticas de los resultados. Se ha usado el Sistema de Cuentas de Salud publicado en 2000 y la versión revisada de 2011, que introdujo las clasificaciones separadas para las fuentes de gasto en salud. Según la versión de 2000, las cotizaciones al seguro de enfermedad eran la principal fuente de financiación pública en Hungría. Según la versión de 2011, casi el 70 % de los ingresos de la caja de seguros médicos procedían de las transferencias de impuestos del gobierno en 2015, lo que ilustra la sorprendente diferencia en la forma en que se informan los ingresos y los gastos utilizando esta versión. El uso de la versión de 2011 servirá de base para la formulación de políticas nacionales y comparaciones internacionales y facilitará la documentación y el análisis de cómo los países han adaptado su combinación de ingresos a las cambiantes circunstancias macroeconómicas. La conclusión de que Hungría tiene un sistema de seguridad social financiada principalmente por los impuestos sugiere que la comprensión y la descripción tradicionales de los modelos de financiación sanitaria ya no son adecuados y limitan la consideración de las posibles opciones de generación de recursos. Hungría es también un buen ejemplo de cómo la separación entre la generación de ingresos y la puesta en común amplía las opciones políticas para abordar las brechas en la cobertura de la seguridad social, aunque el gobierno no haya actuado al respecto debido a la falta de una estrategia coherente de financiación sanitaria. Las conclusiones pueden ser particularmente pertinentes para los países de ingresos bajos y medianos que estén tratando de ampliar la cobertura de la seguridad social a pesar de la limitación del empleo formal.

Political Economy Analysis for Health Financing Reform.

Health financing reform is an inherently political process that alters the distribution of entitlements, responsibilities and resources across the health sector and beyond. As a result, changes in health financing policy affect a range of stakeholders and institutions in ways that can create political obstacles and tensions. As countries pursue health financing policies that support progress towards Universal Health Coverage, the analysis and management of these political concerns must be incorporated in reform processes. This article proposes an approach to political economy analysis to help policy makers develop more effective strategies for managing political challenges that arise in reform. Political economy analysis is used to assess the power and position of key political actors, as a way to develop strategies to change the political feasibility of desired reforms. Applying this approach to recent health financing reforms in Turkey and Mexico shows the importance of political economy factors in determining policy trajectories. In both cases, reform policies are analyzed according to the roles and positions of major categories of influential stakeholders: interest group politics, bureaucratic politics, budget politics, leadership politics, beneficiary politics, and external actor politics. The strategic responses to each political economy factor stress the connectedness of technical and political processes. Applying the approach to the two cases of Turkey and Mexico retrospectively shows its relevance for understanding reform experiences and its potential for helping decision makers manage reform processes prospectively. Moving forward, explicit political economy analysis can become an integral component of health financing reform processes to inform strategic responses and policy sequencing.

Policy summary 1: addressing financial sustainability in health systems

This report (Report 1) is a policy summary which underpins the key theme of the conference ­ financial sustainability in health systems. The report touches on the myriad elements involved in discussions on financial sustainability, and emphasizes the need for a clarification of the key concepts as a prerequisite to understanding both what is at stake and what is involved, in order to then consider potential policy decisions. Given the high level involvement at the conference, and towards enhancing the empirical relevance of the report and the research evidence it synthesizes, an earlier draft for consultation was presented at the conference. The current version represents the final report, taking into account the feedback received. Reports 2 and 3 are part of the joint Health Evidence Network-European Observatory on Health Systems and Policies policy brief series. The reports aim to respond to policy-makers' needs through the provision of accessible syntheses of the available research evidence, along with a discussion of the implementation issues around particular policy options. Earlier versions of the reports were presented during a review workshop hosted by the Czech Ministry of Health on 3 December 2008, involving the authors, representatives of the Czech Ministry, country experts, and key technical staff from the World Health Organization, the European Commission, the World Bank and the Organisation for Economic Co-operation and Development. The feedback and input received from the workshop participants were used in developing the final reports.