Desk review of institutional arrangements for health financing in selected African countries

Vaughan K, Toonen J, Berghuis-Mutubuki E, Dieleman M (2014) Desk Review of institutional arrangements for health financing in selected African countries, KIT Netherlands with TARSC, MoHCC Zimbabwe

As part of the ReBUILD project ‘Rebuilding the foundations for universal health coverage with equity in Zimbabwe’, led by the Training and Research Support Centre (TARSC) this desk study describes features of the collection, pooling, purchasing, monitoring and governance in health financing in a number of African countries with primarily tax-based health financing.

You can download the full report from the TARSC website here.

Executive Summary

Zimbabwe’s current health financing system is based largely on out of pocket payments made by patients, public revenues from taxation and support from external funders including donors and the not-for-profit private sector. As Zimbabwe transitions from immediate recovery measures implemented in 2009-2012 towards building the foundation for longer term rebuilding and universal health coverage (UHC), including introducing an essential health benefit package, a number of research projects to support policy dialogue and decisions on the technical design around elements of equitable health financing are underway.

Primarily through a desk study, this review describes features of the collection, pooling, purchasing, monitoring and governance in health financing, particularly in relation to health financing systems from African countries which are primarily tax-based: Botswana, Gabon, Ghana, Kenya, Tanzania and South Africa. It has this focus recognising that new funding options in Zimbabwe are all earmarked tax options (earmarked VAT, cigarettes, alcohol, road, mobile phone, others), and building on the experience of an earmarked tax for funding HIV interventions which is positively regarded by stakeholders, the review looks at health financing systems in six African countries. This literature review was done under the ReBuild Programme of health systems research and stakeholder dialogue and capacity building that seeks to move from the immediate recovery measures to longer term measures for Universal Health Coverage (UHC), which encompasses equity in access and coverage. The work is supported by Liverpool School of Tropical Medicine through Training and Research Support Centre (TARSC) and the Ministry of Health and Child Care (MoHCC).

This review has revealed a variety of options for collection of taxes and other revenues. Notably, three countries in the review have made significant progress towards universal health coverage using national ‘health insurance schemes’ as their instrument. The ‘health insurance schemes’ we refer to here are unlike traditional ‘health insurance schemes’ in that they are generally funded from a range of sources including general tax revenue, contributions from employers and employees, donor funds and other sources. From Gabon’s National Insurance and Social Welfare Fund to Ghana’s National Health Insurance Scheme to South Africa’s 14-year transition to National Health Insurance, this review has revealed a variety of ways to set up national ‘health insurance schemes.’ Additionally, some countries have found unique and sustainable ways of using taxes to generate revenue for the poor and those working in the informal sector, as in Gabon, or use ways of collecting premiums from these same groups, as in Kenya. Although some countries have set up social health insurance-type schemes for pooling funds, or have pooled funds in semi-autonomous institutions for funding specific services or wider health benefits, they may not have gone so far as to share risks. This is particularly important for countries like Zimbabwe with an HIV prevalence of around 10% and a large poor and vulnerable population.

With regards to expenditure, the case study countries reveal multiple ways of setting priorities to guide resource allocation, ranging from following “infrastructure rather than health needs of the population” in Botswana (Alfred, 2012) to multiple redistributions formulas based on poverty, health need, population size, utilization and historical allocation (Ghana, Kenya, Tanzania, South Africa). However, regardless of the resource allocation formula or system used, we could not find much evidence about the results: have they worked in achieving UHC? Have they improved equity? We argue strongly in favour for monitoring and evaluation systems which can track this, and that results are fed back into the system and adjustments made to the resource allocation formula and process.

Although when discussing financing for health the emphasis is usually put on raising additional revenue for health, making efficient and equitable use of the available resources is equally important. Here the purchasing arrangements are important. An autonomous purchaser creates opportunities for greater accountability of both parties and introduce market elements such as competition that can help decrease cost and improve quality (Abt Associates, 1999). Provider reimbursement systems are also an important. In the case study countries a variety of options exist, from a daily flat rate (Kenyan NHIF), fee-for-service (Tanzania NHIF, Gabon’s CNAMGS, private health insurance in Kenya), DRG (private health insurance in Kenya and Ghana) and capitation with or without risk adjustment (CHF/TIKA in Tanzania, new NHI in South Africa). Newer and more innovative models include payment based on the facility’s accreditation score (Kenya NHIF) and performance incentives (Kenya NHIF, new NHI in South Africa). There are pros and cons to each provider payment mechanism, although with all mechanisms proper accounting is required to help control fraud and also split payments between relevant departments.

In terms of governance arrangements, detailed information was lacking for many of the case study countries. However, we did find that several countries have successfully devolved service delivery while also ensuring coordination, regulation and equity. In Ghana, the Ministry of Health is responsible for the general coordination and oversight of the system, but operational responsibilities have been delegated to the GHS, who in turn has gradually deconcentrated operational functions to its Regional Health Administrations (RHAs) and especially DHA offices. In South Africa’s quasi-federal system, the national level has responsibility for overall strategic direction for the health system but provincial MOHs (with their own budget) oversee all health services within the province. Future District Health Authorities (DHAs) will be established and charged with contracting with the NHI for purchasing, supported by NHIF’s sub-national offices to manage contracts with accredited providers.

Our comparisons on the different options for revenue collection and pooling, resource allocation or purchasing and governance including institutional arrangements, monitoring and evaluation exhibited in these six countries have not led us to conclude that there is one correct way to structure a health financing system in order to achieve universal coverage. Instead, we summarize several important design features as well as suggest some key issues to keep in mind when reforming a health financing system like Zimbabwe’s.