+Alternative Forms of Financing Health

Lyla Latif, Kenya

+The Need for Alternative Forms of Health Financing

A host of innovative schemes to cushion the poor against the financial risks of getting sick, such as low-interest loans, medical-savings accounts and insurance financed by a community-funded risk pool, are being tested in several countries.

Theresa Braine,

Bulletin of the World Health Organisation, Volume 84:2006

+Why?

Every year an estimated 25 million households — more than 100 million people — are plunged into poverty when they or their relatives become ill and they must struggle to pay for health-care services out of their own pockets.

World Health Organisation, 2014

+Definitions of Health Financing

Mobilisation of health care financing

Allocation of funds to the regions and population groups and for specific types of health care

Mechanisms for paying health care

Hsaio, W and Liu, Y, 2001

+Sources of Health Financing

Health is financed through private expenditure, public expenditure and/or external aid

Public expenditure includes all expenditure on health services by central and local government funds spent by state owned

and parastatal enterprises as well as government and social insurance contributions

where services are paid for by taxes, or compulsory health insurance contributions either by employers or insured persons or both this counts as public expenditure.

Voluntary payments by individuals or employers are private expenditure.

External sources refer to the external aid which comes through bilateral aid programme or international non governmental organizations

+How is Health Financed?

General revenue or earmarked taxes

Social insurance contributions

Private insurance premiums

Community financing

Direct out of pocket payments

Preethi Pradhan

+Alternative Forms of Financing Health

Sales taxes: Ghana funded its national health insurance partly by increasing the value-added tax (VAT) by 2.5%.

"Sin" taxes, particularly on tobacco and alcohol: a 50% increase in tobacco tax alone would yield an additional US$1.42 billion just 22 low income countries for which sufficient data exists.

A currency transaction levy would be feasible in many countries.

Solidarity levies - Gabon raised $30 million for health in 2009 by imposing a 1.5% levy on companies handling remittances and a 10% tax on mobile phone operators. Also, levy on airline tickets.

Health Systems Financing and the Path to Universal Coverage World Health Organisation

+Alternative Forms of Financing Health Continued

Resource prioritization. (Most resource rich countries in Africa allocate a large proportion of their revenues to unsustainable and unproductive activities, such as fossil fuel subsidy. This displaces resources needed to finance ‘useful’ development and also encourages excessive consumption of fossil fuel; thereby elevating its negative consequences for the environment)

Microcredit services to health insurance. (E.g., the Grameen Kalyan Health Program, Bangladesh)

A share of VAT taxes and a voluntary contribution from businesses for health (proposed by Italy).

Private capital through Public Private Partnerships.

Promoting faith based organisations as health care financiers.

+Types of Health Financing Systems in Africa

General tax revenue (budget allocation)

Donor funding

Mandatory health insurance (e.g., NHIF, Kenya)

Private voluntary employment based insurance

Community based health insurance (e.g., Central & West Africa)

Out of pocket payments

Fee exemptions (e.g., Ghana)

+Some Examples of Health Financing in Africa In 1995, the Uganda Ministry of Health introduced a

regulation for community based health financing, which empowers communities to meet their health financing needs by pooling resources. It is an alternative to a national insurance plan, favouring local management of health financing and coverage adjusted to community needs and resources.

Rwanda has extended its health insurance coverage through Mutual health organisations

Gabon has implemented mandatory health insurance through the National Health and Social Security Fund

Chad has exempted direct payment for emergency care

+Continued

Burundi employs free health care and performance based financing

Uganda has abolished user fees

Zanzibar as at July 2013 was carrying out a study to provide a solid foundation upon which policy-makers could make an informed and evidence-based decision on the establishment of a health insurance scheme in Zanzibar as an element of health financing reform for UHC in Zanzibar.

There is now political support for the African Public Health Emergency Fund (APHEF). In July 2012 African leaders endorsed its establishment at the 19th Ordinary Session of the Assembly of the Heads of State and Governments of the African Union in Addis Ababa, Ethiopia.

+Conclusion

While it is difficult to increase tax revenue in African countries due to the limited tax base and although it is often not feasible or advisable to increase tax rates any further, it may be feasible to improve tax compliance and the efficiency of the tax system and then, to slowly introduce these alternative forms of financing health.