September | 2016

Peru’s experiences with DRM for

health

Peru has made significant progress in health

50

55

60

65

70

75

80

1985 1990 1995 2000 2005 2010 2015

Life expectancy at birth, total (years)

05

1015202530354045505560

1985 1990 1995 2000 2005 2010 2015 2020

Child mortality rate (per 1000 live births)

Increased spending on health

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1995 2004 2005 2006 2007 2008 2010 2011 2012 2013 /e 2014 /e

Total expenditure on health, % of GDP

Public expenditure on health, % of GDP

Under US$ 100

US$ 350

Increased priority of the health sector in the public budget

0 %

2 %

4 %

6 %

8 %

10 %

12 %

1998 2000 2002 2004 2006 2008 2010 2012 2014

Public expenditure on health, % of public spending

Percentage of population with and without health insurance, 2006-

2014

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Pe

rce

nta

ge

of

po

pu

lati

on

% of population with some form of health insurance% of population without any health insurance

SIS (public tax-financed insurer) is well-focused on the poor and

vulnerable

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Poor Vulnerable Non-vulnerable (all)

Non-vulnerable (informal) Non-vulnerable (formal)

Rate of affiliation to SIS, 2004-2014 according to ENAHO

Financial barrier to access has declined substantially

0%

5%

10%

15%

20%

25%

30%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

"No insurance, no money"

% of people that being ill have no access to health care

Domestic Resource Mobilization

2012-2015

Government Health Budget: 60% increase (nominal terms)

Budget execution: from 80% to 93%

Factors of success

• Political will of the President to increase government health expenditure to implement key reform policies: – Strengthen SIS (centralized public insurer) and expand coverage

– Implement national health investment policy under MOH

• Enhanced capabilities for economic analysis in the MOH

Relationship between the MOF and MOH

• The relationship between MOH and MOF is usually asymmetric.

• MOH has limited capacities to understand (macro)economic analysis, which undermines its position in the negotiations.

• MOF sees MOH as resource consuming with weak linkages to results and service improvement

• Short vs. mid term perspectives

• Biggest challenge: Timely and accurate information on performance and efficiency.

The process

• Usually the MOF informs the Ministries of their budget ceilings in June and there is little room for negotiations

• During my tenure, the President instructed MOF that priority should be given to Education and Health and that the negotiation process with these two sectors should precede the other Ministries

• We started in March and centered the negotiations on key reform policies: expansion on public health insurance coverage; investment policy (including PPPs); wage reform for health personnel, among the most important

The process

• These negotiations were held at the highest level: MOF and MOH Ministers and Vice Ministers – Direct preparation and involvement of the Minister of Health is crucial

• Specific details and information sharing was delegated to technical working groups of both ministries

• The MOH team developed the proposals and these were discussed in the meetings with the Ministers

• Adjustments were developed in the technical meetings and brought back to the meetings with Ministers. (3 meetings, at least)

Materials

• The base document is the Multiannual Macroeconomic Framework (MMF) prepared by MOF, which establishes macroeconomic conditions and fiscal goals for 3 years

• National Health Accounts (1995-2014) and several studies of Fiscal Space for Health

• MOH developed materials for the formulation of budget requirements considering: – Past expenditures and agreed upon commitments

– New requirements associated to key policies

• Although the negotiations were limited to the annual budget, it was useful to project budget requirements for 3 years in alignment with the MMF as reference

Advice for MOH

• Present a sound and feasible program to back your budget negotiation: – Evidence base

– Performance indicators

• Get support from the highest political level

• Start negotiations with enough time

• Attract and “invest” in economists with sound micro and macro background.

Advice for MOF

• Allow appropriate time for negotiations

• Change to a mid-term mind frame

• Ask for evidence of the proposed policies

• Ask for performance indicators for short and medium term that can be monitored with the MOH. – Funding of health information systems

• Incorporate health economists with an understanding of the health sector

What would I do differently

• Greater attention to indicators and communicating them to

the public opinion and main stakeholders

Thank you