Post on 18-Jan-2016
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Will there be enough money for HIV/AIDS in 2031?Will there be enough money for HIV/AIDS in 2031?
Evidence from the health expenditure literatureEvidence from the health expenditure literature
Jacques van der GaagJacques van der GaagWilliam McGreeveyWilliam McGreevey
Vid ŠtimacVid Štimac
OutlineOutline
1)1) Something oldSomething old2)2) Something newSomething new3)3) Interim resultsInterim results4)4) Towards a dynamic modelTowards a dynamic model5)5) Will there be enough money?Will there be enough money?6)6) Discussion and conclusionsDiscussion and conclusions
IntroductionIntroduction
Health Expenditure per capita can almost perfectly be predicted by GDP per capita
Relation Health Exp/cap and GDP/capRelation Health Exp/cap and GDP/cap
1
2
3
4
5
6
7
8
9
4 5 6 7 8 9 10 11 12
Log GDP/capita
Log
Hea
lth E
xpen
ditu
res/
capi
ta
1
2
3
4
5
6
7
8
9
4 5 6 7 8 9 10 11 12
Log GDP/capita
Log
Hea
lth E
xpen
ditu
res/
capi
ta
Using current international US$ rates...
Source: Authors’ calculations, WHO and IMF data, 2004
(most of ) Sub Saharan Africa
Relation Health Exp/cap and GDP/capRelation Health Exp/cap and GDP/cap
A common and extremely robust result of international comparisons is that the effect of per capita GDP (income) on expenditure is clearly positive and significant and further, that the estimated income elasticity is higher than zero and close to unity or even higher than unity.
This result appears to be robust to the choice of variables included in the estimated models, data, the choice of conversion factors and methods of estimation. Source: Gerdtham and Jonsson, Handbook of Health Economics, 2000
IntroductionIntroduction
Health Expenditure per capita can almost perfectly be predicted by GDP per capita
The public share does not increase health expenditures per capita (crowding out private expenditures)
Relation Health Exp/cap and GDP/capRelation Health Exp/cap and GDP/capand the Public Shareand the Public Share
Dependent Variable: Log Health Expenditures/capitaDependent Variable: Log Health Expenditures/capita
ConstantConstant ––3.603.60 ******
(0.000)(0.000)
Log GDP/capitaLog GDP/capita 1.091.09 ******
(0.000)(0.000)
Public expenditure sharePublic expenditure share 0.00020.0002
(0.01)(0.01)
R-squaredR-squared 0.960.96
NN 175175
IntroductionIntroduction
Health Expenditure per capita can almost perfectly be predicted by GDP per capita
The public share does not increase health expenditures per capita (crowding out private expenditures)
ODA does increase the public share (but see point 2)
Relation Public Share and Health ODARelation Public Share and Health ODA((Current US$Current US$))
Dependent Variable: Log Public Health Expenditures/capitaDependent Variable: Log Public Health Expenditures/capita
ConstantConstant ––2.372.37 ******
(0.48)(0.48)
Log GDP/capitaLog GDP/capita 0.9570.957 ******
(0.07)(0.07)
Logarithm of health ODA/capitaLogarithm of health ODA/capita 0.1380.138 ****
(0.06)(0.06)
R-squaredR-squared 0.690.69
NN 8585
Relation Health Exp/cap and Health Relation Health Exp/cap and Health ODA ODA ((Current US$Current US$))
Dependent Variable: Log Health Expenditures/capitaDependent Variable: Log Health Expenditures/capita
ConstantConstant ––3.463.46 ******
(0.23)(0.23)
Log GDP/capitaLog GDP/capita 1.081.08 ******
(0.03)(0.03)
Logarithm of health ODA/capitaLogarithm of health ODA/capita 0.020.02
(0.06)(0.06)
R-squaredR-squared 0.930.93
NN 9090
ProjectionsProjections
Using these results, and given GDP projections, we can project Health exp/cap for the year 2030
Using expenditure needs for HIV/AIDS (provided by others) we can calculate the funding gap
Based on those results we conclude that over time (relatively fast growing) middle income countries may have sufficient funding…
…but (relatively slow growing) low income countries will need significant financial support for years (decades?) to come.
Average Annual growth-rates, 2005-2030Average Annual growth-rates, 2005-2030
Country GroupsCountry Groups PopulationPopulation GDPGDP GDP/capitaGDP/capita
Health Health Spending Spending
/capita/capita
Low income countries (LIC)Low income countries (LIC) 1.70%1.70% 5.07%5.07% 3.36%3.36% 3.51%3.51%
Middle income countries (MIC)Middle income countries (MIC) 0.79%0.79% 5.89%5.89% 5.06%5.06% 5.23%5.23%
LIC and MIC LIC and MIC 0.99%0.99% 5.84%5.84% 4.81%4.81% 4.98%4.98%
Growth Prospects 2005-2030Growth Prospects 2005-2030
Country GroupsCountry Groups 20062006 20152015 20302030
Low income countries (LIC)Low income countries (LIC) 1919 2626 4343
Middle income countries (MIC)Middle income countries (MIC) 105105 180180 353353
LIC and MIC LIC and MIC 8585 134134 269269
Health expenditures per capita Health expenditures per capita for LIC and MIC countries 2006, 2015, 2030, in US$for LIC and MIC countries 2006, 2015, 2030, in US$
Interim conclusionsInterim conclusions
Middle-income countries, especially those with low or concentrated epidemics implying more moderate demands for financing HIV and AIDS programs, may well find means to sustain programs out of their own resources
Low-income countries that also experience a high prevalence of HIV and AIDS are most unlikely to have funds adequate to support health needs over the next quarter century
Growth Rate ModelGrowth Rate Model
How does GDP per capita growth relate to Health Expenditures per capita growth?
Dependent Var: GROSS Health Expenditures per capita growth rate
Constant (trend) 0.01***
GDP/c growth rate 0.53***
Previous year's GDP/capita growth rate 0.27***
Countries: 148, (Effective) Years: 10Data: WHO and IMF
Growth Rate ModelGrowth Rate Model
And what happens with Gross Health Expenditures per capita when we add the growth of external resources per capita?
Dependent Var: GROSS Health Expenditures per capita growth rate
Constant (trend) 0.01***
GDP/c growth rate 0.53***
Previous year's GDP/capita growth rate 0.25***
External Resources for Health/capita growth rate 0.03***
Countries: 115, (Effective) Years: 10Data: WHO and IMF
Growth Rate ModelGrowth Rate Model
..but what happens with Net Health Expenditures per capita (i.e. money already in the system) when we add the growth of external resources per capita?
Dependent Var: NET Health Expenditures per capita growth rate
Constant (trend) 0.01*
GDP/c growth rate 0.61***
Previous year's GDP/capita growth rate 0.18***
External Resources for Health/capita growth rate -0.035***
Countries: 115, (Effective) Years: 10Data: WHO and IMF
Crowding Out?
Growth Rate ModelGrowth Rate Model
Are Health Care Expenditures “recession-proof”?
Dependent Var: GROSS Health Expenditures per capita growth rate
Constant (trend) 0.02***
Positive GDP/c growth rate 0.64***
Negative GDP/c growth rate 0.71***
Countries: 148, (Effective) Years: 10Data: WHO and IMF
…they are not
Growth Rate ModelGrowth Rate Model
…and the result holds when we only look at SSA countries…
Dependent Var: GROSS Health Expenditures per capita growth rate
Constant (trend) 0.01***
Positive GDP/c growth rate 0.54***
Negative GDP/c growth rate 0.63***
Countries: 43, (Effective) Years: 10Data: WHO and IMF
Growth Rate ModelGrowth Rate Model
…but it doesn’t hold for OECD countries.
Dependent Var: GROSS Health Expenditures per capita growth rate
Constant (trend) 0.02***
Positive GDP/c growth rate 0.69***
Negative GDP/c growth rate -0.51*
Countries: 30, (Effective) Years: 10Data: WHO and IMF
Projected aggregate health care expenditures Projected aggregate health care expenditures per region (in millions US$)per region (in millions US$)
RegionRegion
Total Health Total Health Expenditures Expenditures
20062006
Projected Projected THEXP 2030, THEXP 2030, direct elasticitydirect elasticity
% increase % increase from 2006from 2006
Projected Projected THEXP 2030, THEXP 2030,
dynamic modeldynamic model% increase % increase from 2006from 2006
EAPEAP 185,269 1,001,351 440.5% 773,192 317.3%
HICHIC 3,184,351 4,794,299 50.6% 5,235,389 64.4%
LACLAC 164,131 379,495 131.2% 383,910 133.9%
MNAMNA 49,906 122,601 145.7% 125,098 150.7%
SASSAS 39,117 201,449 415.0% 165,723 323.7%
SSASSA 24,922 90,625 263.6% 79,405 218.6%
Projected aggregate health care expenditures Projected aggregate health care expenditures per region (in millions US$)per region (in millions US$)
World regions, population, per capita health World regions, population, per capita health spending, 2005 and 2030spending, 2005 and 2030
RegionRegion PopulationPopulation
20052005 Population Population
20302030
Health Health Expenditures / Expenditures /
capita 2005capita 2005
Health Health Expenditures / Expenditures /
capita 2030capita 2030 EAPEAP 1,8251,825 2,1412,141 $60 $60 $324 $324
ECAECA 451451 453453 $166 $166 $611 $611
LACLAC 541541 710710 $286 $286 $506 $506
MNAMNA 305305 438438 $170 $170 $292 $292
SASSAS 1,4501,450 1,9241,924 $26 $26 $99 $99
SSASSA 731731 1,1191,119 $35 $35 $97 $97
HICHIC 959959 998998 $3,304 $3,304 $5,666 $5,666
GlobalGlobal 6,2636,263 7,7827,782 $578 $578 $952 $952
Prospects for health spendingProspects for health spendingSub Saharan Africa Sub Saharan Africa in 2004in 2004
05
10
15
20
Fre
que
ncy
0 100 200 300 400hlt2004
05
10
15
20
Fre
que
ncy
0 100 200 300 400hlt2004
In 2004, In 2004, 34 out of 47 34 out of 47
SSA countries, on less SSA countries, on less than $50/capita…than $50/capita…
05
10
15
Fre
que
ncy
0 100 200 300 400hlt2030
05
10
15
Fre
que
ncy
0 100 200 300 400hlt2030
Prospects for health spendingProspects for health spendingSub Saharan Africa Sub Saharan Africa in 2030in 2030
……in 2030, stillin 2030, still27 out of 47 27 out of 47 on less on less
than $50/capita…than $50/capita…
SSA countries with projected Health SSA countries with projected Health Expenditures/capita < $40Expenditures/capita < $40
Population (mil.)Population (mil.)Health Health
Expenditures /capitaExpenditures /capita
CountryCountry 20042004 20302030 20042004 20302030
Burundi 7.00 10.46 3.00 4.56
Zimbabwe 13.00 15.95 27.20 4.56
Guinea-Bissau 1.53 2.70 8.70 5.33
Niger 13.25 25.20 8.60 8.42
Comoros 0.60 0.95 13.20 8.71
Central African Republic 4.02 5.55 13.20 10.82
Eritrea 3.88 6.20 9.90 11.08
Madagascar 18.04 30.05 7.30 11.58
Togo 5.85 8.98 17.90 13.91
Côte d'Ivoire 18.10 25.01 33.00 18.91
SSA countries with projected Health SSA countries with projected Health Expenditures/capita < $40 (cont.)Expenditures/capita < $40 (cont.)
Population (mil.)Population (mil.)Health Health
Expenditures /capitaExpenditures /capita CountryCountry 20042004 20302030 20042004 20302030 Ethiopia 74.42 117.78 5.60 19.00 Benin 7.97 13.18 24.20 20.52 Mauritania 2.89 4.66 14.50 23.35 Chad 9.21 17.70 19.60 25.30 Guinea 9.18 13.29 21.80 26.08 Sierra Leone 4.87 7.54 6.60 29.68 Mali 12.82 22.63 23.80 30.24 Burkina Faso 12.41 20.50 24.20 32.31 Ghana 21.25 30.89 27.20 36.63 Congo 3.83 7.89 27.60 36.64 Kenya 33.04 44.43 20.10 37.63 Rwanda 8.62 13.00 15.50 39.42 United Republic of Tanzania 37.70 54.63 12.00 40.06
SSA countries with projected Health SSA countries with projected Health Expenditures/capita < $30Expenditures/capita < $30
Discussion and conclusionsDiscussion and conclusions
GDP/capita is main determinant of Health Expenditures/capita
The public share does not increase Health Expenditures/capita
ODA does increase the public share (but see point 2)
In Sub-Saharan Africa, by 2030, 27 countries will still have health expenditure levels below $50 per capita
What to do with low-income countries that What to do with low-income countries that suffer from low growth rates and often from suffer from low growth rates and often from high HIV/AIDS prevalence levels? high HIV/AIDS prevalence levels?
MoreMore ODAODA? Business as usual won’t work!
What about Off-Budget support?What about Off-Budget support? HIV/AIDS exceptionalism Cannibalization of existing health care
infrastructure Need for integration in health system
development
Any other ideas?Any other ideas?
Towards a new approachTowards a new approach
Development of voluntary low-cost Development of voluntary low-cost health insurance for low-income peoplehealth insurance for low-income people
Basic package
Subsidized premiums (avoid crowding out)
Use ODA to add to the package for specific diseases (incl. HIV/AIDS)