The missing link? How good financial

governance helps strengthen health systems

The OECD perspective

GIZ/BMZ 20 April 2016

Chris James (Health)

Camila Vammalle (Budgeting & Public Expenditures)

• Fiscal sustainability, fiscal space & universal

health coverage

• Understanding and improving budgeting

practices for health in LMICs

2

Outline

Good financial governance & fiscal

sustainability

Universal health

coverage

Achievement of SDGs

3

The OECD Joint Network on Fiscal

Sustainability of Health Systems

www.oecd.org/health/health-systems/fiscal-sustainability-of-health-systems

Extension of network beyond OECD countries

• Budgeting practices survey in LAC & Africa

• Case studies in Peru & South Africa

Regional networks

Central & Eastern Europe - Health and budget officials joint

meeting (Oct 16,Estonia)

Latin America and the Caribbean - Implementation of budgeting for health

survey (Nov 15 - Apr 16)

- Case study: Peru (Mar - Jun16)

- Health and budget officials joint meeting

(7-8 July 2016, Bogotá)

Africa - Health and budget officials joint meeting

(Oct 2015, Tanzania)

- Case study: South Arica (Aug-Oct 2016)

- Budgeting for health survey

(May-Dec 2016)

Asia - Health and budget officials joint

meeting (Dec 2016, TBC)

Objective:

Benchmark good practices and identify bottlenecks to ensure

universal health care

Fiscal sustainability of health systems in the OECD

Insights for low- and middle-income countries

5

Spending more on health can add value…

6

AUS

AUT

BEL

BRA

CAN

CHL

CHN COL

CRI

CZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

ISL

IND

IDN

IRL

ISR ITA

JPN

KOR

LVA LTU

LUX

MEX

NLD NZL NOR

POL

PRT

RUS

SVK

SVN

ESP

SWE CHE

TUR

GBR

USA

R² = 0,51

65

70

75

80

85

0 2000 4000 6000 8000 10000

Life expectancy in years

Health spending per capita (USD PPP)

Source: OECD Health Statistics 2015, http://dx.doi.org/10.1787/health-data-en.

But some health spending is wasteful

$690 billion

wasted per year in the US

IoM (USA), 2012

WASTE

20-40% of total

health spending could be saved

World Health Organization, 2010

$300 billion

lost to mistakes or corruption worldwide per

year

European health care fraud and corruption network, 2010

• Fiscal space… availability of budgetary room that

allows a government to provide resources for a desired

purpose without any prejudice to the sustainability of a

government’s financial position [IMF].

• Fiscal sustainability… ability of a government to

maintain public finances at a credible and serviceable

position over the long term. High and increasing debt

levels as main red flag [~EC, IMF, OECD].

8

Fiscal space and fiscal sustainability

What about donor funding?

1. Improving revenue collection & broadening tax

base for funding health care

2. Finding a better way to share costs and define

the benefit basket

3. Securing value for money from spending

9

OECD experience demonstrates a

sustainable UHC strategy includes

Finding a better way to share cost:

Focus spending on cost-effective interventions

• Avoid unsustainable

capital investments

• Be more specific and

selective in defining

the range of services

covered

10

11

Central level funding transparent and

tied to demand

• Costed benefit package as quality

assurance mechanism

Federal-state negotiation helped target

funds to state needs

• State transfer has fixed and per person

components

National

Regional

Financing expansion in a federal

context: Mexico’s Seguro Popular

Chile: universal and full coverage for

limited essential package

12

13

% of THE financed by all health coverage schemes (2012)

The challenge of budgeting for health

14

• Very high priority for citizens

• Many stakeholders involved

• Great institutional variation across countries

15

Why is controlling expenditure on health care

such a challenge?

Great international variety of public health systems

• All systems must address the following issues:

Survey for budgeting practices in LAC countries – Preliminary results

17

Health expenditure as a percentage of GDP (2013)

Source: WHO database and OECD Health Statistics 2015

0 1 2 3 4 5 6 7 8 9 10

Peru

Belize

Mexico

Guatemala

Colombia

LAC Average (11)

Argentina

Ecuador

Chile

Uruguay

OECD Average (34)

Paraguay

Honduras

General government expenditure Private expenditure External resources

Health systems and percentage of population

covered

Source : Question 2 Survey on Budget Practices for Health in LAC countries (2015)

Population covered per type of health system in LAC

0

20

40

60

80

100

120

140

160

180

200

ARG COL ECU MEX BEL URU PAR GUA HON CHL PER

Public system Social insurance

Mandatory private insurance Voluntary

Other Not covered

Initial budgeted expenditure Vs. actual expenditure N

o.

of

ye

ar

s

0

1

2

3

4

5

6

7

8

9

10

ECU PER PRY GTM URY BLZ HND COL MEX ARG CHL

Variation below 5%

Years of last 10 with underspending

Years of last 10 with overspending

Source : Question 11 Survey on Budget Practices for Health in LAC countries (2015)

What type of influence does the CG have over

overall health spending by SNG?

No

. o

f c

ou

ntr

ies

Source : Question 24 Survey on Budget Practices for Health in LAC countries (2015)

0

1

2

3

4

5

6

CG has ultimateresponsibility forhealth financing

CG requires sub-national

governments toset their own

performance orhealth spending

targets

None CG establishesperformance

targets for sub-national

governments

CG sets healthspending targetsfor sub-national

governments

PER HND ECU

ARG GTM PRY

COL CHL

COL

PER URY COL MEX BLZ

CONCLUDING THOUGHTS

22

Spending more on health a worthwhile

investment, but value-for-money is crucial

• Investing in health crucial for economic

development

• Many low- and middle-income countries could

find additional resources for health

– Improving budgeting practices as first step

• Countries’ push for UHC is commendable, but

value-for-money needs to be ensured

23

Working together towards sustainable UHC

Reduce poverty and increase economic growth

Survey

Annual meetings

Case studies

Analytical research

Benchmark good practices and identify bottlenecks

Catalyze processes for better alignment between

budgeting and health

Increase coverage and improve service quality

More effective and efficient use of financial resources

Reduce morbidity and increase life expectancy

Document health budget

tools and practices

Improve capacity

and create dialogue

THANK YOU

camila.vammalle@oecd.org

chris.james@oecd.org