Reprioritizing government spending on health: pushing an elephant up the stairs?

Does Public Financial Management Save Life? Evidence from a Quantitative Review of PFM and Health Outcomes in Sub-Saharan African Countries

Public financial management (PFM) theory suggests that improvements in the allocation, execution, and monitoring of public funds can result in improved sectoral outcomes, including in health. However, the existing literature on the relationship between PFM quality and health outcomes provides limited empirical documentation and insufficient explanation of the mechanics of that relationship. This paper contributes to the literature by estimating the correlation between PFM quality and health outcomes from a sample of sub-Saharan African countries over the period 2005-2018, using a pooled ordinary least squares (OLS) estimator. The analysis uses Public Expenditure and Financial Accountability (PEFA) scores as proxies for PFM quality. The findings indicate that countries with high-quality PFM tended to have the lowest maternal, under-five and noncommunicable diseases (NCDs) mortality. Among the standard PFM dimensions, the one associated with the higher correlation with maternal and under-five mortality was "predictability and control in budget execution." Better PFM quality was significantly associated with a drop in maternal and under-five mortality in countries which allocated a higher proportion of their budget to the health sector. In countries allocating a lower proportion of their budget to health, the correlations between PFM quality and the three mortality indicators were not significant. The negative correlations between PFM quality and maternal and under-five mortality were significant only in countries with more effective governance. These findings support an emphasis on strengthening PFM as a means of improving health service provision and health outcomes.

Redistribution and the health financing transition

Public financing is necessary for realizing universal health coverage (UHC), a policy commitment that emphasizes that everyone should have access to health services they need, of sufficient quality to be effective, and that the use of these services does not expose individuals to financial hardship. As countries undergo their health financing transitions, moving away from external and out-of-pocket (OOP) financing toward domestically-sourced public financing, finding ways to increase public financing in an efficient, equitable, and sustainable manner is front and center in the policy dialogue around UHC. This paper focuses on one aspect of the health financing transition that has generally received less attention: that UHC is also intrinsically about a policy direction that emphasizes at its core redistribution of resources from the well-off to the poor. Differences in the level and organization of public financing for health for a given level of national income also reflect differences in social and political preferences for redistribution and equity across countries. Hence, navigation of a country’s health financing transition in ways that accelerates progress towards UHC also implies that public resources are targeted and expended in ways to improve effective service coverage and reduce OOP spending specifically for the poor. To leverage a country’s health financing transition for UHC, mechanisms should be introduced for: (i) ensuring that benefit entitlements are explicit and intertemporally commensurate with levels of public financing; (ii) fragmentation in pooling mechanisms is reduced to facilitate cross-subsidization without jeopardizing equity; (iii) levels of OOP and complementary sources of financing are nudged towards the well-off until core levels of public financing are adequate to provide similar levels of coverage for all; and (v) that purchasing of services is done in ways that helps reduce geographic- and income-related inequities in access and supply of quality health services. This implies careful policy choices need to be made, ones that require looking beyond the simplistic dichotomy between OOP and public sources of financing for UHC at the aggregate level to more nuanced and disaggregated assessments of the organization, use, and net fiscal incidence of financing and expenditures.

From slippery slopes to steep hills: Contrasting landscapes of economic growth and public spending for health

Identifying ways to increase public spending on health is critical for the achievement of universal health coverage. While policymakers and donors often look at available options for increasing public spending for health in the medium-term, examining trends and drivers of past growth can help countries elucidate important lessons and to anticipate changes in the future. This note analyzes trends in inflation-adjusted per capita public spending for health vis-à-vis economic growth within and across a sample of 150 countries over the 2000-2017 period. Since 2000, per capita public spending for health across low- and middle-income countries has more than doubled. Less than one-fifth of this increase, however, resulted from a higher priority for health in government budgets. The remainder was largely due to conducive macroeconomic conditions such as economic growth and increases in total public spending. Furthermore, across most countries, a single time trend does not adequately capture the evolution either of economic growth or of per capita public spending on health. Instability in growth rates is large for both indicators, revealing distinct episodic patterns.

How can health ministries present persuasive investment plans for women's, children's and adolescents' health?

Most low- and middle-income countries face financing pressures if they are to adequately address the recommendations of the Global Strategy for Women's, Children's and Adolescent's Health. Negotiations between government ministries of health and finance are a key determinant of the level and effectiveness of public expenditure in the health sector. Yet ministries of health in low- and middle-income countries do not always have a good record in obtaining additional resources from key decision-making institutions. This is despite the strong evidence about the affordability and cost-effectiveness of many public health interventions and of the economic returns of investing in health. This article sets out 10 attributes of effective budget requests that can address the analytical needs and perspectives of ministries of finance and other financial decision-makers. We developed the list based on accepted economic principles, a literature review and a workshop in June 2015 involving government officials and other key stakeholders from low- and middle-income countries. The aim is to support ministries of health to present a more strategic and compelling plan for investments in the health of women, children and adolescents.