16/03/2015
CHOOSING PATHWAYS THAT LEAD TO UNIVERSAL COVERAGE: WHAT ARE THE OPTIONS?
Di McIntyre, University Of Cape Town Health Economics Unit, University Of Cape Town
There is consensus that states have an obligation to ensure Universal coverage (UC), through creating and realising an entitlement for everyone to be protected against the costs of health services and to have access to the effective, quality services they need. From an equity perspective, social solidarity is essential to achieve UC, through income cross-subsidies (from the rich to the poor) so that payments are based on the ability to pay, and risk cross-subsidies (from the healthy to the ill) so that people access health services based on need and not ability to pay.
So what options do east and southern African (ESA) countries have to reach this goal? While there may be some distance before reaching UC, the choices made at this stage are critical for ensuring steady progress towards it.
The 2010 World Health Organisation’s World Health Report unequivocally states that it is not feasible to achieve UC through voluntary enrolment in health insurance schemes. A number of ESA countries are introducing community-based health insurance (CBHI) as one means of pre-payment. These schemes will not move a country towards UC, although they may temporarily assist vulnerable households until mandatory pre-payment funding increases considerably and user fees are removed. However there is a potential danger that their existence may allow governments to abrogate their responsibility to promote mandatory pre-payment funding mechanisms.
Voluntary schemes can only be complementary or supplementary to mandatory pre-payment financing mechanisms, including tax and mandatory insurance. From international experience, mandatory pre-payment funding is well over 60% (and often over 70%) of all health service expenditure in countries that have health systems that are regarded as universal.
Many African countries are now discussing or introducing mandatory health insurance (MHI) schemes. However, caution should be exercised. If MHI contributions are placed in a separate pool to benefit the contributors only (which often is the case) this creates a tiered and inequitable system that does not ensure that all have the same service benefit entitlements. If the goal is to achieve universal coverage, then it is critical to minimise fragmentation in funding pools to achieve cross-subsidies. This means that if MHI is introduced, the funds collected from it should be pooled with those from government revenue to fund benefits for the whole population.
There has also been some investigation into introducing MHI contributions by those outside the formal employment sector. This should receive more critical assessment than there has been to date, especially as such contributions are strongly regressive and generate little revenue. If there is political insistence on generating funding from those outside the formal employment sector, indirect taxes, such as VAT, are a more equitable and efficient mechanism for achieving this goal, particularly in low-income countries. However, in the context of the large income inequalities present in many east and southern African countries, efforts to improve the collection of taxes from high net-worth individuals and multinational corporations may be more appropriate. Further, some countries are generating revenue for health from royalties on natural resources such as gold, copper and oil, and not only from taxes.
There is often an almost automatic assumption that there is no ‘fiscal space’ to increase funding of health services from government revenue. It is important to critically examine this assumption.
Government revenues in ESA countries range widely from about 12% of GDP in Madagascar to 33% in the DRC, while government expenditure ranges from less than 13% of GDP in Madagascar to 33% in Mozambique. These ranges are considerably lower than the levels in advanced economies for both government revenue (36%) and expenditure (44%). Government debt levels are considerably lower in ESA countries, ranging from less than 26% of GDP in Zambia to 64% in Madagascar, than the average for advanced economies of over 100%. Given that all of these measures are expressed relative to GDP and that some lower-income countries are able to attain higher levels of revenue and expenditure, there does appear to be scope to explore increasing the fiscal space within the so-called emerging markets and low-income countries.
Health financing policy choices not only relate to how revenue is mobilised for UC. Purchasing involves determining service benefit entitlements (what services are purchased with the pooled funds and how people will be able to access these services) and how service providers will be paid. Attention should be given to more active purchasing. This requires identifying the health service needs of the population, aligning services to these needs, paying providers in a way that creates incentives for the efficient provision of quality services, monitoring the performance of providers and taking action against poor performance. Active purchasing is critical for ensuring that available funds translate into effective health services accessible to all.
Moving towards universal coverage also requires improvements in service delivery and management. In particular, emphasis should be placed on improving services at the primary health service level, which are effective in reaching the poor and which are able to address most of the health service needs of the population in ESA countries. Improving primary health services offers the greatest potential for increasing population coverage affordably. In addition, it is important to broaden the decision-space of managers at facility and district level, so that they can be more responsive to patients’ and staff needs and to the incentives created through active purchasing. Equally decentralisation of management responsibility should be accompanied by development of governance structures that allow for accountability to the local community.
East and southern African countries have some way to go in moving toward UC. The choices made at various points in the journey will be important for achieving that goal. While the detail of those choices will depend on the context in each country, international experience and regional evidence suggest that far more emphasis should be placed on government revenue funding for health services and that funds from mandatory health insurance schemes should be pooled with funds from government revenue. We also need a richer body of evidence, including from research, to support active purchasing of services and measures for addressing service delivery and management challenges, as these are essential if universal access to services of appropriate quality is to be achieved.
Please send feedback or queries on the issues raised in this briefing to the EQUINET secretariat: admin@equinetafrica.org. For more information on the issues raised in this op-ed please visit www.equinetafrica.org and read EQUINET Discussion paper 95: McIntyre D (2012) ‘Health service financing for universal coverage in east and southern Africa
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