how much can south africa spend on nhi ? a fiscal health analysis

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



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



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



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)



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)



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)



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

)



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


GDP=


GDPX



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

[email protected]

33

how much can south africa spend on nhi ? a fiscal health analysis

Documents

health expendituresspending

government spending

healthgovt health spendinggdp

coverage health outcomes

private sector laborevidence

chart data range

lower right corner of

fiscal space