In plenty and in time of need The political economy of allocating public resources to health in...
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Transcript of In plenty and in time of need The political economy of allocating public resources to health in...
In plenty and in time of needThe political economy of allocating public resources to health in Barbados
Jamila Headley (BA, MPH), PhD Student, University of Oxford
Priorities 2010, April 23-25, Boston MA
Objectives
To make the case for more public health research on the allocation of public resources to health
To discuss general trends in health expenditure in Barbados from 1974 to present
To describe the nature of the budgetary process, especially as it relates to health
To consider how public expenditure on health is affected in times of economic crisis
To consider the implications for changes in the overall size of the health budget for priority setting
Priority Setting and the Public Budget
Governments must divide scarce financial resources between health, education, the building of roads etc.
At the national level, this is done through the public budgetary process
The process determines both the overall size of the health budget and often how these resources will be distributed at the macro-level
Yet the study of public budgets, and the overall allocation of public resources for health, has been largely neglected in the field of public health
Why the neglect?
It is thought to go beyond the technical remit of public health
Budgeting is incremental, relatively predictable and therefore not very interesting.
Incremental theories of budgeting
Rose to prominence in the early 1960s Charles Lindblom (1959), Aaron Wildavsky (1964) and
Richard Fenno (1966) The most influential descriptive and explanatory theory of
public budgeting
Budgets display a high degree of stability over time Each year’s budget varies only marginally from the previous
year’s Generally the budget increases slightly year after year
Main ideasMain ideas
BackgroundBackground
What are budgets?What are budgets?A mechanism for allocating scarce resourcesA historical recordA plan for the futureThe result of a political process
A mechanism for allocating scarce resourcesA historical recordA plan for the futureThe result of a political process
What do they tell us?What do they tell us?How government will generate revenue and how much government will spendWhat government’s priorities areNational consensus about the role of governmentA whole lot about the distribution and dynamics of power
How government will generate revenue and how much government will spendWhat government’s priorities areNational consensus about the role of governmentA whole lot about the distribution and dynamics of power
Why are they important?Why are they important?
They redistribute wealthThey have fiscal and economic consequencesThey allow citizens to hold government accountableFinancial resources are critical to implementation
They redistribute wealthThey have fiscal and economic consequencesThey allow citizens to hold government accountableFinancial resources are critical to implementation
Source: Wildavsky A. The Politics of the Budgetary Process. Boston: Little, Brown; 1964.
Budgets are “the most operational expression of national priorities in the public sector”
Aaron Wildavsky (1964) “The Politics of the Budgetary Process”
Barbados: A brief background
Only 166 square miles (430 square km)
Population: 285,000 Former British colony, which
gained independence in 1966 GDP per capita $13,003 USD
(2007) HDI rank 37 Life expectancy of 74 years IMR of 11 per 1,000 live births Small island developing state
The data
Yearly ‘Approved Estimates’ records from the MoF Components used to compute health spending are
consistent All data has been adjusted for inflation and population
growth, where appropriate. Interviews with key actors in the process Non-participant observation of the budgetary process
over a 2 year period
MoH, Heads of Agencies, HPUMoH, Heads of Agencies, HPU
Each agency/service area prepares their
budget
Internal consultations with Minister, PS and
HPU
Each agency/service area prepares their
budget
Internal consultations with Minister, PS and
HPU
Central Bank, MoFCentral Bank, MoF
Targets are set for deficit and inflation
Level of revenue estimated and total
expenditure recommended
Targets are set for deficit and inflation
Level of revenue estimated and total
expenditure recommended
Prime Minister, Cabinet, MoF
Prime Minister, Cabinet, MoF
Ceilings are set for each ministry/area based on Cabinets
prioritiesPolicies for revenue generation devisedMoF advises health ministry of ceiling
Ceilings are set for each ministry/area based on Cabinets
prioritiesPolicies for revenue generation devisedMoF advises health ministry of ceiling
Prime Minister, Parliament, Senate
Prime Minister, Parliament, Senate
Estimates are debated
Any changes are made and vote is taken to approve
estimates
Estimates are debated
Any changes are made and vote is taken to approve
estimates
MoF, MoH, Heads of Agencies
MoF, MoH, Heads of Agencies
Consultations to finalize health budget
Any ceiling overruns and defended and
considered
Consultations to finalize health budget
Any ceiling overruns and defended and
consideredThe Budget: Actors & Process
Political and socio-economic
environment
Domestic interest groups
International actors (e.g. WB, IMF, IADB)
General trends in public spending, 1974-2010
Government revenue as a percentage of GDP has gradually increased (from 20-34%)
Government expenditure has more than tripled
Spending is usually pro-cyclical (i.e. very responsive to changes in revenue)
Signs of a counter-cyclical response to the current economic crisis
Two main parties are both generally fiscally conservative
Public resource allocation to health, 1974-2010
Real public spending on health has doubled since 1974
Per capita expenditure on health increased from $273 to $543 USD.
Generally incremental, but with sharp decreases and increases at several points
Health funding was relatively stagnant from 1974 to 1986
Changes in government revenues does not fully account for fluctuations
Fluctuating priority for health
The percentage of GGE allocated to health gives us an idea of priority status
Percentage of GGE for health has ranged between 8.9 and 15.9%
Priority for health has been quite dynamic over the study period
Since 1996 there has been a general trend of public divestment from health
Key factors affecting public resources for health
Elections Political ideology/development model Other priorities
Economic growth Recessions IMF austerity programs
Economic factorsEconomic factors
Political FactorsPolitical Factors
Public resources for health in
difficult economic times
Public resources for health in
difficult economic times
Some observations
The findings of the effects of economic recessions on public resources for health are mixed
In 2 cases priority for health was protected or augmented
In the remaining cases, the priority status of health was reduced considerably
The occurrence of general elections (1991), and IMF intervention (1982-83) might hold some explanatory power
The relationship between the macroeconomic environment and public financing for health is not clear-cut
IMF austerity program (late 1991-1993)
High government spending leading up to the 1991 elections against a backdrop of global recessionary conditions, resulted in depleted foreign reserves and BOP problems.
CauseCause
FeaturesFeatures Expenditure reduction – 8% cut in wages across the entire public sector, lay-offs
of over 2000 public sector employees Increased taxation - surtax between 1.5-4% on income, increased consumption
taxes and levies
Effects of the health sectorEffects of the health sector 21% decline in real public expenditure on health over the duration of the
program The percentage of government expenditure allocated to health was reduced by
2.13%
Contrasting concerns in the current crisis(Based on observation of the budgetary process and interviews)
Size of deficit Containing inflation Level of Foreign reserves Political support Unemployment/job
creation Stimulating economic
growth
At least maintaining the budget at the previous year’s level
Providing health care in the face of increasing demand
Protecting the size of the health workforce
Maintaining and improving quality of care
Ministry of Finance Ministry of Health
Implications for the public health sector
More stringent enforcement of budget ceilings Programs funded by foreign sources are protected,
causing others to disproportionately bear the brunt of cuts.
There is a resultant squeeze on capital expenditure and goods and services
Unpredictability in actual month-to-month disbursement of funds
However, personal emoluments are generally safe-guarded.
Preserving priority for health in the hard times
1. The role and power of choice by policy makers
2. Use of evidence in decision-making and opportunities for improved efficiency, effectiveness and equity in the health system
3. Addressing the impact of IMF stabilization programs on the health system
Concluding thoughts
Public financing for health is extremely vulnerable in times of crisis
The WHO is encouraging countries to protect health spending in the wake of this global economic crisis
In Barbados, and other developing countries, I do not believe that the task WHO has set before us is an impossible one.