Health financing for universal primary healthcare (UPH)

These HEART talks videos were recorded at a seminar on health financing for UPH. The seminar was held at Oxford Policy Management (OPM) on June 17th 2016.  It was the first in a series of health financing seminars inviting reflection and discussion from decision-makers, academics and technical specialists on how the global Universal Health Coverage (UHC) financing discourse can pragmatically translate into country-level decisions and implementation.

Sophie Witter introduces, affirming that UHC is now embedded in the health agenda and what we need to do next is work out the how. It is hugely ambitious and requires local interpretation. The WHO are proposing a strategy to categorise services by priority: expanding high priority services and ensuring priority groups are not left behind. Public finance is important in achieving UHC as is a move towards mandatory pre-payment systems. Out-of-pocket payments must be reduced.

There has to be strategising at the national level to operationalise the ambitious goal of UHC. One way is to use national health financing strategies. These strategies should be based on diagnosis of problems, focus on the whole population, prioritise actions and set a time period. This should be based on hypotheses that can be tested through an evaluation strategy. Realistic objectives need to be set around resource mobilisation, risk pooling, purchasing, and governance/public financial management. Organisation needs to be planned: prioritisation and sequencing, capacity building measures, management and implementation, and monitoring of results. Costings are needed to identify optimum levels of spend.

Tim Ensor presents OPM’s experience with health service costing. The dynamic health system environment must be accounted for in costing. This will mean accounting for changes in coverage and population changes. This may be done using an accounting approach making assumptions about how cost structures will react. Or it may be modelled based on actual experience if sufficient samples are available.


Changes in the way services are provided must be considered; technologies and treatments etc. Cost estimates must also beware of incorporating unnecessary inefficiencies in provision; for example, inappropriate treatments or low volumes leading to high overhead costs. Modelling data from different facilities can help account for this. The second way of dealing with this is to look in detail at what facilities are doing and then consult with experts on what the difference might be if a service was run based on the best evidence. Use of routine data is important in costing studies and this should be developed into the future.

Mark Blecher of the National Treasury of South Africa talks about the country’s recent experiences in health service costing and it links to approaches to fiscal space and revenue raising. Costing is a centrally important skill and tool for budgeting.  There are shortages in trained staff to carry out costings. Limited routine data collection is another hindrance.

He talks about the primary health care costing study carried out in South Africa. With the Department of Health he is trying to get different unit costs and total programme costs for different programme areas.

Investment cases have been used as a way of developing a budget bid. This starts with a wide set of potential interventions. Workshops are then run to discuss these with different groups. Models come out of this process providing best overall life years saved. These are put together with a costing model to give incremental cost-effectiveness ratios. This has been a useful tool.

He talks about National Health Insurance (NHI) costing. Three costing models were used which all came to a similar result. He describes the models in some detail. Actuaries are involved in some of the costings as they are skilled at modelling.

Creating fiscal space is a challenge in South Africa. Reprioritisation towards health is required which means making decisions to make cuts in other areas. Taxes have been increased to improve fiscal space, including a sugar tax. The tax policy section of the government came up with options for raising revenues large enough to cover UHC: payroll tax, surcharge on personal income tax, or an increase in VAT. Starting new taxes needs to be linked to readiness to implement new arrangements.

Tomas Lievens of OPM shares key learnings on fiscal space modelling. Outlining OPM’s experiences, he provides an overview of the four-step process adopted in approaching fiscal space that looks at resource needs, resource gaps, funding options, and further funding gaps.

What OPM have learned is that capturing the imagination of Ministries of Health is required to address lack of knowledge of the fiscal space concept and budgeting processes. This can be done using the ‘fiscal space diamond’ and gap analysis, as described in the presentation (see also HEART OPM paper: Fiscal space for health). It should also be made clear that fiscal policy is a choice, not an imposed budget ceiling. OPM found that Ministries of Finance are more likely to accept findings from their own models rather than models imposed on them. Financial programming frameworks are often used by Ministries of Finance. These frameworks should be populated with jointly agreed IMF Article IV data.

OPM also found that the process is as important as the findings in fiscal space modelling. Ministries of Health and Finance should be involved from the start. Relationships should be built for future policy reform and budget discussions. Fiscal space analyses should be embedded in comprehensive health financing analysis. It is important to distinguish between planning and advocacy.

Adrian Gheorghe of OPM talks on fiscal space modelling. He provides insight into the overlaps between advocacy and planning, the importance of country ownership, and the need to look ahead towards a methodological consensus. Looking ahead at implementation, it is important to look at how fiscal space models actually influence resource allocations and how best to operationalise efficiency gains. He suggests that tools should integrate health needs, costs and macroeconomic parameters and try to add allocative efficiency.

See also Adrian Gheorghe’s Lancet Global Health blog on fiscal space which is based on discussions from the event: Fiscal space analysis for health: friend or foe?

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