Michael Burinyuy AyenikaEmail:mayenika@gmail.com

Final Assignment

A proposed financing solution to a development problem you are aware of in your professional or community contextProblem Area:

Primary Health Care Financing for Inclusive Policy reforms in Cameroon

Section 1-Problem Diagnosis

1.1. Introduction

Healthcare financing reforms has for the past decades been a common place across the spectrum of high to low income countries. The post independent health financing reform (The Bamako Initiative, adopted in 1988) in Sub Sahara Africa (SSA) requires individuals to pay for health services out of their pockets (OOP) as a cost recovery strategy. This method of health care financing is still disputable among policy makers (Daniel and Valéry, 2014) as it has lead to inequality among the rich and the poor to access health care services. The burden of such a policy lies on the poor or under privileged household (Oluyele et al, 2013). Household health financing in Cameroon is mostly done through out-of pocket payment. Out-of-pocket payments for health services have cause households to incur catastrophic expenditures (catastrophic when a household must reduce its basic expenditure over a period of time to cope with health cost) (Ke et al, 2003), which in turn push them into poverty. The need to pay out-of pocket also mean that households do not seek care when they need it. According to a study by Adam Leive and Xu Ke in 2008, the system of financing health expenditure in Africa is too weak to protect households against catastrophic expenses. The borrowing or selling assets to finance health care is a common practice. The proportion of households who have paid their health spending by borrowing or selling assets ranged from 23% in Zambia to 68% in Burkina Faso and so on. Health system financing in Cameroon is carried out by both the public and the private sectors. The public financing mechanism involves Social Health

Insurance (SHI), and Taxes (direct, indirect, general and earmarked). On the other hand, apart from user charges, private health is finance by Community Based Health Insurance (CBHI), Private Health Insurance (PHI), Mutual Health Organizations (MHO) and Medical Saving Account (MSAs) (Nouria, n.d). 1.2-Socio-economic contextThe economic crisis of the 1980 years drove Cameroon into recession.Accentuated by the 60% decrease in salaries of civil servants in 1993 and the devaluation of the CFA franc in 1994, this crisis has significantly changed the structure of consumption and access to care. Thus, the decline in households’ financial capacity was accompanied by a decline in the state budget devoted to health. The share of health expenditure in the household budget increased from 4% in 1984 to 6% in 1996 and 7.2% in 2001. Between 1995 and 1996, total health expenditure was 250 billion CFA francs, 72% financed by households, 22% by the state and 6% partners (Commeyras et al., 2005). In 1982, Cameroon adopted and implemented the primary health care (health for all by the year 2000) to provide free care. In 1993, the country adopted the Bamako Initiative through policy reorientation of primary health care, through: the recovery of costs for care and medications, community participation, and the organization of health districts (Sieleunou et al., 2010). In addition, Cameroon has benefited from innovative financing of health after numerous international initiatives aimed at achieving the Millennium Development Goals (MDGs) by 2015. The Health Sector Wide Approach (SWAP), adopted in 2010, emerges as a key instrument for mobilizing and optimizing the use of resources for the implementation of the Health Sector Strategy. Despite these measures, the “Average Propensity of Total Medical Consumption” of households is high in Cameroon, where 51% of the population lives on less than two dollars a day.

1.3-Statement of the problemSince independence in 1960 a series of health policy reform have been out carried by African countries to make health services more available and accessible to the population. These reforms mostly concerned health systems (organization, provision of services, resource allocation, financing, and so on). In 1988 the international development community uniformly accepted the introduction of user’s fee as a cost recovery strategy. The aim of such a policy

was to raise revenue for health system, reduce frivolous demand, and cost containment. After implementation, it has been proven that this policy has lead to inequality (accessed to health care), limited revenue raised, constrains necessary demand (Frivolous demand not an issue in poor contexts), very regressive (push people into poverty or debt), exemption mechanisms do not work and discourage early care seeking In 2002, a survey carried out by the Ministry of Public Health (MoH) shows that 62% of Cameroonian lack access to quality health care and medications due to lack of adequate finance. This was more peculiar among the rural masses. The “Caisse Nationale de la Prévoyance Sociale” (CNPS), a public social security organization covers only private and public sector formal workers. On the other hand private social insurances subscription rates are too high; this has resulted to a low enrolment rate of about 3 to 4% of the population of Cameroonians (Fondo and Ibrahim, 2011). In a country where a majority of the population lives less than two dollars a day, 32% of households spend less than half of their income on health, while 16% of households spend more than half of their income and 52% spend more than the total income. This corresponds to a weight of 68% in health care spending. Due to the high cost of quality health care, a large portion of the population seems to relay on cheap counterfeited medication (road-side drugs) and traditional healers for treatment resulting to large number of deaths. The study will base at proposing a sustainable health care financing method in Cameroon.

Literature review

2.1-The Notion of Key Concepts:

According WHO (2015), health policy refers to decisions, plans, and actions that are undertaken to achieve specific health care goals within a society. An explicit health policy can achieve several things: it defines a vision for the future which in turn helps to establish targets and points of reference for the short and medium term. It outlines priorities and the expected roles of different groups; and it builds consensus and informs people. The aim of health financing policy is to;- promoting universal protection against financial risk;-promoting a more equitable distribution of the burden of funding the system (WHO, 2008). Equity-Efficiency Tradeoff refers to an economic situation in which there is a perceived tradeoff between the equity and efficiency of a

given economy. This tradeoff is commonly viewed within the context of the production possibility frontier, where any additional gains in production efficiency must be offset by a reduction in the economy's equity (Arthur, 1975).

In the context of limited resources, the equity versus efficiency trade-off is a major issue when prioritizing health care. There is no consensus on how to balance equity with efficiency within the national health system (NHS), leading Sassi and colleagues (2001) to argue that the trade-off has led to inconsistent judgments in the development of health policy and to appeal for guidance from the NHS when equity and efficiency conflict. On the other hand, efficiency refers to the allocation of limited economic resources to meet the healthcare needs of a society. It can be;

1-Technical efficiency: Achieving a specified health gain with the minimum number of inputs.

2-Economic efficiency: Achieving a specified health gain at the least cost.3-Allocative efficiency: Maximizing the health gain from a specified level of resources (sometimes called social or Pareto efficiency). While Equity, is the fair distribution of benefits across the population. It is important to note that equity differs from equality. Equality is the equal distribution of benefits across the population, and can be measured objectively. In the utilitarian theory of social justice, equity = equality. This is called end state equity a situation where there is an equal distribution of benefits. In the egalitarian

theory of social justice, equity is achieved when people have the same opportunities to obtain benefits even if the outcomes are unequal. This is called process equity. Equity may apply to public health in several ways.  For example:

Equal health outcomes. Equal access to care for patients with equal need. Equal use of health care for equal need. Equal expenditure/resources of care for equal need. Equal costs (to the payer) for equal need.

There are two principles of equity in providing health care:

Horizontal equity: The equal treatment of individuals or groups who share similar circumstances.

Vertical equity: Individuals with different (or unequal) health should be treated differently (or unequally) in proportion to morally relevant factors. Morally relevant factors include ability to benefit, autonomy, and desert. Morally irrelevant factors include age, sex, socio-economic status, income, education, ethnicity, disability, location, nationality. Achieving horizontal or vertical equity may involve re-organization of services and redistribution of resources (PHAST, 2011).

Health Expenditures: As defined by the World Bank, the total health expenditure is the sum of expenditures on public and private health. It covers the provision of health services (preventive and curative), family planning activities, related to nutrition and reserved for emergency health assistance but excludes the provision of water services and hygiene. Health expenditure, recorded in the accounts of health, covering different types of services: hospital charges, costs “outpatient” drug spending, the expenditure approach, prostheses and small equipment medical, medical transportation costs (IRDES, 2013). In this study, the health expenditure of households include expenses related to medical care and goods (hospital care, outpatient care, medical transportation and medical goods), as well as preventive medicine.

Health financing; According to WHO, health financing is the way financial resources are generated, allocated and used in health systems. The following issues relating to health financing, should be asked: how and from what sources raise sufficient funds for health? How to overcome financial barriers

that exclude many poor accesses to health services? How to offer a range of services of fair and effective health?

Household income: In economics, the primary income (primary income) of household income that households derive from their contribution to economic activity either directly (income from employment or self-employment) or indirectly (income furniture placement or real estate). It does not include social security benefits - this is income before redistribution. In national accounts, the primary household income includes income directly or indirectly related to household participation in the production process (INSEE, 2013). In our study, the income mentioned here is imputed income to the main activity of household members.

Average propensity of the total medical consumption: The average propensity of medical consumption is the share of income spent on medical consumption. The total medical consumption includes the consumption of medical care and goods (CSBMs), as well as preventive medicine. It is hospital care, outpatient care, medical transportation and medical goods.

2.2-General information on health financing in Africa

The key issue that arises in terms of health care spending is not how to reduce but rather how we choose to finance (issue of receipts) and optimized (question of the organization), with the goal of an inclusive health fair system. So, thinking about the financial aspects of expenditure and revenue of the health system cannot be achieved without addressing the problem of the organization of this system. Indeed, whether it is able to bring new resources to the system or to consider how spending facing the community versus individual, any direction that is acceptable only if the financial effort is fair and optimized what it will be used. However, three fundamental developments appear to maintain”upstream” the dynamism of the expense. These are: (i) changes in health (epidemiology and aging) that shape the needs and demand for health care, (ii) the standard of living through the rise in demand for health care driven by a higher income, and (iii) the progress of medical knowledge (technical progress), allowing both to better diagnose diseases and better treatment (Albouy et al, 2009.). Thus, knowledge of the sheer scale of health spending by households is an avenue that should be explored, given the importance of private health expenditure in development planning. African leaders pledged at the Abuja conference in 2001, to mobilize more financial resources for the achievement of the Millennium Development

Goals (MDGs) by allocating at least 15% of their national budgets to the sector health, seem to have difficulty meeting their commitments, because of weakness and fragmentation of health systems. These commitments were renewed in Gaborone, Botswana in 2005 and in Ouagadougou, Burkina Faso in 2006. Indeed, donor funding is still a large part of public health spending on the continent. Thus, in some countries, 50% or more of their budgets come from the private or foreign aid, according to the 2013 WHO report on global health statistics. In nearly half of the African countries, the private health financing is equal to or exceeds largely public funding, up more than 70% in some states such as: Cameroon (70, 4%), the DRC (71.6%), Sao Tome and principles (64.7%), the Chad (75%), Ivory Coast (75.5%), the Guinea (67.5%) to Bissau (66.9%), Guinea, Liberia (81%), Nigeria (68.5%), Sierra Leone (84.7%) in Burundi (65%),

2.3-A Summary table of health financing mechanism in Africa

Various Health financing Mechanisms

Private PublicCommunity Based Health Insurance (CBHI) Social Health Insurance (SHI)Private Health Insurance (PHI) Taxation (direct, indirect, general,

earmarked)Medical Savings Accounts (MSAs) Informal payments Pros and cons of each of the above methods of health financingPros consUser fees/ charges

– Raise revenue for health– Reduce frivolous demand– Cost containment– Exemption mechanisms can protect

vulnerable

– Limited revenue raised– Constrains necessary

demand - Frivolous demand not an issue in poor contexts

– Very regressive – push people into poverty or debt

– Exemption mechanisms do not work

– Discourage early care seeking

Community-Based Health Insurance– potential ability to collect revenue – pool funds – reach population groups that

market based health financing arrangements do not, such as population in the informal sector and socially excluded groups

– small pool of funds/ fragmentation

– Limited financial protection– Limited revenue collection– Poorest excluded– Difficult to transform into

national level system

Private Health Insurance– enable the healthcare of the

relatively affluent to be self-financed,

– free up public resources– encourage innovation and

efficiency

– discriminates in favour of healthy and young adults who use little care

– lead to market segmentation, cream skimming and exclusion of vulnerable groups (such as the poor, ill and elderly)

– Creates a two-tier health system, where those with private health insurance can access better quality services.

– When subsidised by the state, it can prove to be very expensive for the government.

Social Health Insurance

• Relate initial payment to income rather than risk,

• Increase financial accessibility• Potentially large risk pooling that is

subsidisation/ redistribution• Increase transparency - politically

acceptable

• Tax on payroll: can increase overall production cost

• Focuses on formal sector• Can create two tier health system• Tends to exclude those in greatest

need• Feasibility issues in SSA

Tax financed systems• Payment related to income• Progressive • Potentially very large risk pool• Still largely untapped in SSA

Feasibility issues: administrative capacity, tax avoidance

Lack of transparency

General or hypothecated tax

• Draws on broad revenue base• Allows trade-offs between health care and

other areas of public expenditure

• Lack of transparency• Linked to economic growth• Feasibility issues: administrative

capacityDirect or indirect tax

• Usually progressive • Administratively simple when records of

income etc exists

• if informal market is large then need strong institutional capacity

• can create horizontal inequity:– When income tax rates vary

geographically– When some form of income

are exempt from income tax– When some forms of

expenditure are tax deductible

Direct or indirect tax• highly visible • can promote heath if tax on health

damaging goods

• Indirect taxes are overall regressive as related to consumption not overall income. In particular:

– People with higher income save more and savings are not subject to indirect taxes

– People with lower income spend proportionately more of their income on heavily taxed goods (that is food)

– Many indirect taxes are set as lump-sum amounts (for example vehicle licenses)

Conclusion Health financing key to governance Health financing sits within health system No method is perfect Universal coverage/ equity

User fees to be removed CBHI limited scope/ success Public financing mechanisms best

in principleNouria (n.d) Domestic health financing in sub-Saharan Africa Save the Children UK

2.3-Out-of Pocket Health Financing (OOP)

Out-of-pocket (OOP) payment is the major health financing mechanisms across Sub-Saharan African countries and developing countries in general (Swadhin et al, 2010). According to OECD (2011), “Out-of-pocket payments are expenditures borne directly by a patient where insurance does not cover the full cost of the health good or service”. They include cost-sharing, self-medication and other expenditure paid directly by private households. Some households face very high out‐of-pocket payments. Catastrophic health expenditure is commonly defined as “payments for health services exceeding 40% of household disposable income after subsistence needs are met” (WHO, 2014). The World Bank uses a more recent definition of financial catastrophe, where out-of-pocket payments exceed 10 percent of total household income. This approach is simpler to estimate and the results are similar to those derived by the WHO method. This indicator is calculated as :( Household out-of-pocket expenditure for health during the past 12 months / Total household income (or total income - subsistence needs in past 12 months) x 100 (WHO, 2010). According to WHO (2014) OOP household expenses for health services

remain too high in Cameroon. This rate varies from 94.6% in 2009, 94.6% (2010), 94.3% (2011), and 94.2% in 2012.

In sub-Saharan African countries the burden of OOP are shifted towards those who use services more, possibly from high to low income earners, where health care needs are higher (OECD,2011). Health system financing in Africa and other developing countries are predominately funded by OOP. Household health financing have a lot of impact on household poverty. A majority of studies to assess the impact of household health expenditure on household poverty have been carried out in Asia and Latin America. A survey carried in 11 Asian countries reveille that poverty level increased by 14% due to OOP health expenditure and about 78 million people are pushed into poverty due to heath care costs. Another survey of 89 countries found that catastrophic expenditure was reported by 3%, 1.8% and 0.6% of households in low, middle and high income countries respectively. Even though few studies have been documented about the levels of catastrophic health expenditures in Africa; in Burkina Faso, about 15% of households reporting illness incurred costs greater than 40% of their non-food consumption expenditure; in Uganda, 2.9% of households incurred catastrophic expenditure in 2003, and in Nigeria, 40.2% of households incurred costs greater than 10% of their consumption expenditure. Poor household were mostly affected (Jane and Thomas, 2012).

2.5-Can Health Insurance replaces OOP in Sub-Sahara Africa Since 1990s, health care insurance is one of the ways used by developing countries to improve access to health care. This is to avoids catastrophic OOP by patients and spreads the financial risk among all the insured. This has been done through the creation of mutual health organization and national health insurance schemes. These organizations are of great importance in the payment of premium, and when the insured need to use health care services. However, even with the existence of these organizations, the rate of catastrophic OOP is too high in Africa with low subscription rate in Mutual Health Organizations (MHO). The low subscription is as a result of ignorance of the existence and rule play by MHO or insurance schemes; lack of adequate premium (subscription fee), and traditional believes. The Table below shows the effect of premium on the subscription rate in mutual health organizations in Africa (Florence and Valéry, 2009).

Table 2.2: The effect of subsidizing premium on health care insurance subscription among the poor in some countries

Measure Examples Does it increase membership among the poor?

To remember

a. Premiumsubsidized 100% by third parties

Rwanda,Ghana,

Tanzania

Yes, when the subsidy is really applied.

Sufficient funds must be available to compensate for premiums not paid by the poor.

The population must be informed of the subsidy

b. Premium partially

subsidized by third parties

Burkina Faso,Ghana

Yes, for some of them.

Even “minimum” premiums that households must still pay are obstacles for the poorest.

c. Premium varies based on income

Bangladesh Yes, if the level of premium is well established

Premium levels must accurately reflect the levels of wealth in the population

d. Premium paid in

kind or by work

Ethiopia,India

Indications that this is acceptable for the poor

The “amount” of the payment in kind or in work must be clearly defined to avoid exploitation.

e. Loans to help pay the premium

Rwanda Yes, for the moderately poor

Institutional support is important to facilitate access to loans for moderately poor households.

f. Dividing thepremium into

smaller payments

Uganda, Mali,Senegal,Tanzania

Yes, for the moderatelypoor

g. Payment of the premium at harvest time

Burkina Faso,Guinea-Conakry

Indications that it can work for the moderately poor

It is important to know the annual periods of resource availability.

Source: Measures to promote health insurance membership among the poor, (Florence and Valéry, 2009)

Section 2-Solution to Health Financing in Cameroon (Conclusion)

From the above problem diagnosis and literature receive; it can be observed that at the moment, the best policy for health financing that completely protects the poor does not exist either in Cameroon or Africa. However developed countries and other donor organizations can help to reduce the financial burden or outpatient bills in Cameroon and other less developed countries. These can be done through;2. Providing free financial assistants to cover some common health diseases

such as free HIV/AIDS medicine.3. Provide financial assistant to cover or reduce the minimum premium

allocated by health social insurance schemes in Cameroon.

4. Provide free financial assistants to health units and patients as is the case with the World Bank Project with “Result Based Financing” (demand and supply side).

Through these methods we can ensure that the poor are protected against catastrophic payment and save lives. Referencing Arthur O. (1975) “The Big Tradeoff.”  Available at <http://medianism.org/2014/03/04/it-is-an-equity-efficiency-curve-not-a-tradeoff/>Chunling L. Brian C. Guohong L. Christopher J. (2009), Limitations of methods for measuring out-of-pocket and catastrophic private health expenditures, WHO, Available at < http://www.who.int/bulletin/volumes/87/3/08-054379/en/>Daniel B. and Valéry R. (2014), Ideas and Policy Implementation: Understanding the Resistance against Free Health Care in Africa, Département de science politique Université du Québec à Montréal (UQAM), Case postale 8888, succursale Centre-ville Montréal, Québec, Canada H3C 3P8 Available at <www.cirdis.uqam.ca>LJane C. and Thomas M. (2012), catastrophic health care spending and impoverishment in Kenya, Available at < http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3561146/>Jane C. and Thomas M. (2012), catastrophic health care spending and impoverishment in Kenya, National Center for Biotechnology Information, U.S. National Library of Medicine 8600 Rockville Pike, Bethesda MD, 20894 USA, Available at < http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3561146/>Ke Xu. David B. Kei K. Riadh Z. Jan K. Christopher J. (2003), Household catastrophic health expenditure: a multi-country analysis [pdf[ Available at < http://www.who.int/health_financing/Lancet%20papercatastrophic%20expenditure.pdf> p(111-112) Accessed in 27/06/2014INSEE (2013), National Institute of Statistics and Economic Studies of France: www.insee.fr /definitions and methods)National population and housing census (2005), 2005 Census Results Finally Published, Cameroon Available at < http://www.dibussi.com/2010/04/cameroon-2005-census-resultpublished.html> Nouria B. (n.d), Domestic Health Care Financing in Sub-Saharan Africa, Save the Child Foundation, UK

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