how much can south africa spend on nhi ? a fiscal health analysis
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How Much Can South Africa Spend on NHI?
A Fiscal Health Analysis
How Much Can South Africa Spend on NHI?
A Fiscal Health Analysis
Jack Langenbrunner
World Bank
December 20111
2
Impact on Health Services – Health Care Provider Response
Impact on Coverage – Health Outcomes, Health Expenditures
Spending More Public Funds on HealthWhat Should We Spend or What Can We Spend?
“Should”• Messier/more difficult
to measure
• Social preferences
• Policymakers decide relative to other sectors like Education
“Can”• Assessment of Fiscal
Health
• Links Health sector to bigger Macro-economic picture
3
Brazil
Thailand China
Germany
United Kingdom
India
Mexico
Netherlands
Russian FederationTurkey
South Africa
0
5
10
15
20
Tota
l hea
lth s
pen
din
g (
% o
f GD
P)
100 250 1000 2500 10000 25000 100000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Total Health Expenditure as Share of GDP versus Income Per Capita (2009)
ChinaNetherlands
Brazil
Thailand
South Africa
United Kingdom
Russian Federation
MexicoTurkey Germany
India
Below averagePerformance
Above averagePerformance
Belo
w a
vera
ge
Perf
orm
ance
Abo
ve a
vera
ge
P
erf
orm
ance
Life
exp
ect
an
cy r
ela
tive
to in
com
e p
er
capita
Life expectancy relative to total health spending per capita
Sources: WDI;WHONote: Both axis current US$
Global Comparisons of Life Expectancy versus Income and Total Health Spending (2009)
IndiaNetherlandsTurkey
ChinaGermanyThailand
South Africa
BrazilRussian Federation United KingdomMexico
Above averagePerformance
Below averagePerformance
Abo
ve a
vera
geP
erfo
rma
nce
Bel
ow a
vera
ge
Per
form
anc
e
Und
er 5
Mo
rtal
ity p
er
1,0
00re
lativ
e to
inco
me
per
cap
ita
Under 5 Mortality per 1,000relative to total health spending per capita
Sources: WDI;WHONote: Under 5 Mortality and GDP per capita data are for the latest available year.South Africa is for 2009.
Under 5 Mortality Ratio Relative to Total Health Spending and Income
IndiaNetherlandsTurkey
China
GermanyThailand
South Africa
BrazilRussian Federation United Kingdom
Mexico
Above averagePerformance
Below averagePerformance
Abo
ve a
vera
geP
erfo
rma
nce
Bel
ow a
vera
ge
Per
form
anc
e
Ma
tern
al M
ort
ality
pe
r 1,
000
rela
tive
to in
com
e p
er c
apita
Maternal Mortality per 1,000relative to total health spending per capita
Sources: WDI;WHONote: Maternal Mortality and GDP per capita data are for the latest available year.South Africa is for 2008.
Maternal Mortality Ratio Relative to Total Health Spending and Income
How Much How Much CanCan a Country Spend? a Country Spend?
Accounting for Government Spending on HealthAccounting for Government Spending on Health
Gov’t health spending
GDP=
Total gov’t spending
GDPX
Gov’t health spending
Total gov’t spending
Fiscal Capacity Public Policy Priorities
Government health spending as share of the
economy
Adopted from Kutzin, 2009
China
NetherlandsBrazilThailand
United Kingdom
Mexico GermanyRussian Federation
South Africa
India
Turkey
10
30
50
Reven
ue
sh
are
of G
DP
(%
)
100 250 1000 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scaleData are for latest available year 2000-2009
Revenue Share of GDP versus Income per Capita
Fiscal Context/Fiscal CapacityFiscal Context/Fiscal Capacity
BrazilUnited Kingdom
China
Germany
IndiaThailand
Mexico
Netherlands
Russian Federation
Turkey
South Africa
0
5
10
15
20
Tot
al g
over
nm
ent
spe
ndin
g (
% o
f GD
P)
100 250 1000 2500 10000 25000 100000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Total Government Expenditure as Share of GDP versus Income Per Capita (2009)
BrazilGhana Thailand
ChinaKenya
NetherlandsUnited Kingdom
IndiaNigeria
Germany
MexicoRussian Federation
Turkey
South Africa
0
5
10
15
20
publ
ic h
eal
th s
pend
ing
(% o
f GD
P)
100 250 1000 2500 10000 25000 100000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Public Health Expenditure as Share of GDP versus Income Per Capita (2009)
Brazil
Netherlands
China
ThailandGermany
India
United Kingdom
Mexico
Russian Federation
Turkey
South Africa
0
20
40
60
80
Priv
ate
he
alth
spe
ndin
g(%
tota
l he
alth
spe
ndin
g)
100 250 1000 2500 10000 25000 100000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Private Spending as Share of Total Health Spending versus Income per Capita (2009)
Brazil
Germany
Ghana
KenyaIndia
NetherlandsRussian FederationUnited Kingdom
ChinaThailand Turkey
MexicoNigeria
South Africa
0
5
10
out o
f poc
ket h
eal
th s
pend
ing
(%
of G
DP
)
100 250 1000 2500 10000 25000 100000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Out of Pocket Health Expenditure as Share of GDP versus Income Per Capita (2009)
How Much How Much CanCan a Country Spend? a Country Spend?
Accounting for Government Spending on HealthAccounting for Government Spending on Health
Gov’t health spending
GDP=
Total gov’t spending
GDPX
Gov’t health spending
Total gov’t spending
Fiscal Capacity Public Policy Priorities
Government health spending as share of the
economy
Adopted from Kutzin, 2009
How Much How Much CanCan a Country Spend? a Country Spend?
Accounting for Government Spending on HealthAccounting for Government Spending on Health
Gov’t health spending
GDP=
Total gov’t spending
GDPX
Gov’t health spending
Total gov’t spending
Fiscal Capacity Public Policy Priorities
Government health spending as share of the
economy
Adopted from Kutzin, 2009
How Much How Much CanCan a Country Spend? a Country Spend?
Accounting for Government Spending on HealthAccounting for Government Spending on Health
Gov’t health spending
GDP=
Total gov’t spending
GDPX
Gov’t health spending
Total gov’t spending
Fiscal Capacity Public Policy Priorities
Government health spending as share of the
economy
Adopted from Kutzin, 2009
New Taxes…are these needed?
17
Fiscal Space?
Source: South Africa: 2010 Article IV Consultation, IMF, September2010
External Debt Climbing…
Source: South Africa: 2010 Article IV Consultation, IMF, September 2010
But…Still Favorable Compared to EU
Beware Tax on Private Sector LaborEvidence in the OECD 1980-2006
21
Wagstaff, World Bank, 2009
Avoid Tax on Private Sector LaborEvidence in the OECD 1980-2006
22
Wagstaff, World Bank, 2009
South Africa level of informality already
high at 37%
23
2) When Contributions Are Linked to Coverage: Many Have No Insurance
Countries Get Stuck
Increasing General Revenues• Germany (next slide), France, China, Thailand, Moldova…
Earmarked taxes may be an option
Often criticized from a public finance perspective, but tend to be a popular option used by countries.
Thailand has employed “sin taxes” to fund health promotion.
Ghana has 2.5% VAT for health insurance fund. But, regressive in South Africa
Can sin taxes be raised further in the future?Can sin taxes be raised further in the future?
A Better Idea
24
25
Germany Increased Reliance on General Revenues
Tax Subsidies€ 15.5 bn
Contributions€ 159.0 bn
Central Health Fund
Sickness Funds
Physicians€ 28.5 bn
Drugs€ 30.0 bn
Hospitals€ 57.4 bn
Other€ 45.2 bn
Additional Premia€ 0.7 bn
2010 figures
Liquidity Reserve€ 4.2 bn
OECD, November 2011
Taxes on Tobacco: Better Idea?
26
The Bigger Issue:Reprioritizing Health as a Government Expenditure
Priority
27
Aze
rba
ijan
Pa
kist
an
Ind
ia
Gu
ine
a-B
issa
u
US
A
Ma
uri
tan
iaT
ajik
ista
nJa
ma
ica
Bra
zil
Ph
ilip
pin
es
Mo
rocc
oE
cua
do
r
Arm
en
ia
Mo
ng
olia
To
go
Ka
zakh
sta
n
Gh
an
a
Be
nin
Ca
mb
od
iaH
aiti C
hin
a
Ug
an
da
Ma
li
Kyr
gyz
sta
n
Se
ne
ga
lE
sto
nia
Re
pu
blic
of
Ko
rea
Mo
zam
biq
ue
Lith
ua
nia
Mo
ldo
vaP
an
am
a
Arg
en
tina
Bo
snia
an
d H
erz
eg
ovi
na
Ma
da
ga
sca
rM
exi
coZ
am
bia
Slo
vaki
aC
ub
aA
ust
ria
Ne
the
rla
nd
sB
ots
wa
na
Ca
na
da
Cro
atia
Rw
an
da
0%
5%
10%
15%
20%
He
alt
h a
s %
of
tota
l g
ov
ern
me
nt
sp
en
din
g
Kutzin and WB, 2011
Ru
ssia
Final Note…
Implementation Issues
28
29
There is a Long Road to UniversalityThere is a Long Road to Universality
0%
20%
40%
60%
80%
100%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Thailand
Colombia
PhilippinesKenya Ghana
Source: Hsiao, 2005
30
National Health InsuranceComplex Activities Take Time…
Collection Pooling Benefits Package Contracts Payment Systems MIS systems Claims Processing Quality Assurance Regulations Forecasting …
0
2
4
6
8
10
12
14
16
Years to FullyImplement
Estonia
Romania
Kyrgz
Albania
Russia
The Path to Universal Coverage:…Indonesia, Philippines, Vietnam, China, Cambodia
31
Success Factors in ‘Good Practice’ Health Coverage Expansion Reforms
Institutional and Societal Factors
Strong and sustained economic growth Long-term political stability and
sustained political commitment Strong institutional and policy
environment High levels of population education
Policy Factors
Commitment to equity and solidarity Health coverage and financing
mandates Financial resources committed to
health, including private financing Consolidation of risk pools Limits to decentralization Primary care focus
Implementation Factors
Coverage changes accompanied by carefully sequenced health service delivery and provider payment reforms
MIS -- Good information systems and evidence-based decision-making
Strong stakeholder support Efficiency gains and copayments
used as financing mechanisms Flexibility and mid-course
corrections
Source: Gottret Schieber, and Waters, Good Practices in Health Financing, World Bank, 2008Note: Countries included in the study -- Chile, Colombia, Costa Rica, Estonia, Kyrgyz Republic, Sri Lanka,
Thailand, Tunisia, and Vietnam
Thank You
jlangenbrunner@worldbank.org
33
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