Mobilizing the private sector for HIV and social health protection Joep M.A. Lange
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Mobilizing the private sector for HIV
and social health protection
Joep M.A. Lange(acknowledging Onno Schellekens and Marianne Lindner)
PharmAccess FoundationAmsterdam Institute for Global Health & Development
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How I (a physician) feel talking about financing (in 12+ slides)
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4
750
5.703
PopulationX mio
Total health expenditure
x $ mio
Burden of communicable
diseasesDALYS
AfricaAfrica
Rest of the world
Rest of the world 265
345
38046
4.351.772Source, WHO 2008
Health systems in Africa Africa spends very little on health careHealth care in Africa is underfunded
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Health Expenditure per Capita in Africa, 2005
0
50
100
150
200
250
300
350
400
450
500
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45
US
$
Public Health Expenditure Private Health Expenditure $34 CMH Spending Target
1.Congo Dem. Rep.2.Burundi3.Niger4.Ethiopia5.Sierra Leone6.Eritrea7.Liberia8.Guinea Bissau9.Comoros10.Madagascar11.Central Afr Rep.12.Tanzania13.Mozambique14.Chad15.Togo16.Guinea17.Mali18.Mauritania19.Burkina Faso20.Ghana21.Benin22.Nigeria23.Kenya
24.Sudan25. Cote d’Ivoire26.Rwanda27.Uganda28.Angola29.Malawi30.Congo Rep.31.Gambia32.Zimbabwe33.Zambia34.Senegal35.Lesotho36.Cameroon37.Sao T & Pr.38.Cape Verde39.Swaziland40.Equatorial Guinea41.Namibia42.Gabon43.Mauritius44.Botswana45.South Africa46.Seychelles
Health expenditure per capita in sub-Saharan Africa is far from sufficient
Ta
nza
nia
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The AIDS response did create islands of sufficiency in a swamp of insufficiency (Gorik Ooms, MSF)
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Health systems in Africa
0
25
50
75
100
Malawi
Rwan
da
Ugan
da
Keny
a
Nige
ria
Mozam
ique
Namibi
a
Zambi
a
Tanz
ania
Zimba
bwe
Public sector
Public sector
Private sector
Private sector
OtherOther
Source: National Health Accounts 1997-2002 (latest year available); McKinsey analysis
Donor funding goes mostly to the public sectorThe private (for-profit) health sector is underfunded
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Public financing of health in developing countries
Lu C, et al. Lancet 2010;375:1375-87
Development assistance for health (DHA) to government had a negative and significant effect on domestic government spending on health (minus $ 0-43 to 1.14 for every $ of DAH).
DAH to the non-governmental sector had a positive and significant effect on domestic health spending.
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Health systems in Africa
23%
36%34% 33%
15%
12%
16%
10%
primairy care outpatient inpatient total
highest quintile
lowest quintile
Source: Preker AS, Langenbrunner JC et al (2005)
Public services benefit the rich more than the poor The poor are often not reached
Percentage of lowest and highest quintile using public health services
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51%
67%61%
48%
64%
53%
45% 44%
Nigeria Uganda Kenya Ethiopia
Highest income quintile
Lowest income quintile
Health systems in Africa
Percentage of lowest and highest quintile receiving care from private providers
The private-for-profit health sector is an important provider for the poor> 40% of lowest income quintile receive health care from private providers
Source: The business of health in Africa, IFC 2008
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Health systems in Africa
Social security and private prepaid health care spending
0%
10%
20%
30%
40%
50%
Sout
h Afri
ca
Cape V
erde
Namibi
aMali
Zimba
bwe
Botsw
ana
Sene
gal
Swaz
iland
Rwan
daKe
nya
Côte d'
Ivoire To
go
Maurit
iusBe
nin
Nigeria
Niger
Tanz
ania
Madag
ascar
Seyc
helle
s
Gabon
Malawi
Guinea
-Biss
au
Burki
na Fa
so
Ethiop
ia
Guinea
Chad
Mozam
bique
Ugand
a
Camer
oon
China
Perc
ent
of t
otal
hea
lth
expe
ndit
ure
Only 4% of total health expenditure in Africa is financed through health insurance
Only 4% of total health expenditure in Africa is financed through health insurance
Source: WHO 2008
Risk pooling is very scarce Africans lack protection against medical costs; solidarity is limited
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Health systems in Africa
0%
25%
50%
75%
100%
Sout
h Afri
ca
Sao To
me & Pr
inc.
Maurit
ania
Seyc
helle
s
Botsw
ana
Madag
asca
r
Cong
o B.
Maurit
ius
Sierra L
eone Mal
i
Nige
r
Zambia
Benin
Burk
ina Fa
so
Eritr
eaSu
dan
Chad
Cent
ral A
frica
n Rep
.
Cote
d'Ivo
ire
Ugan
da
Camer
oon
Buru
ndi
Guin
ea
Out
-of-
pock
et h
ealt
h ex
pend
itur
e
(as
% o
f to
tal he
alth
exp
endi
ture
)
Source: WHO 2008
Private out-of-pocket expenses are ~50% of total health expenditureMany fall in a poverty trap; increased inequity
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The second law of health economics
% Out of Pocket Expenses of Total Health Expenditure
versus GDP per capita
0%
20%
40%
60%
80%
100%
100 1.000 10.000 100.000
GDP/ Capita (log scale)
% O
ut
of
Po
cket
Africa versus developped countries (GDP/Capita>$15000)
Logaritmisch (Africa versus developped countries (GDP/Capita>$15000))
A
AGO
SLE
MRT
LSO
NAM
DZA
CP VCOG
SWZ
ZAF
GAB
BWA
MUS
SGP
TZA
NGA
ZMB
UGA
LUX
USA
FRA
Rich countries have a lower share of out-of-pocket expenses than poor countries
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Health systems in Africa
Financi
ng
Deliv
ery
Demand
Medical care usage
Supply
Quality health care
low
low
low
low
African health systems are stuck in a vicious circle:low demand and low supply of health careAccess to quality basic health care among the poor is low
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The need for an alternative approach
• There are good reasons to involve government in health care: • Efficiency concerns: market failures, externalities• Equity concerns/ social justice: health (care) as a human right
• However, preconditions for state-led model to work are not met in Africa:• Reasonable level GDP/capita: sufficient domestic government
resources• State capacity to enforce means-tested contributions for health
care and actually deliver services nation-wide
• Innovative approaches to healthcare development are needed
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• How to use donor money in such a way that:
the total amount of financial resources in the health system increases, and
access to quality basic health care among low-income people is increased?
The role of donor funding
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• Strategies that avoid crowding out effects and reduce out-of-pocket
expenses
• Set up voluntary risk pooling and prepayment for low-income groupsChannel private out-of-pocket payments into risk poolsThose who can pay do pay
• In tandem with boosting supply chainNo supply, no prepaymentTelecom industry: low-income people do prepay when the
service is good
The role of donor funding
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Financing
Delivery
Alternative model: a virtuous circle of health care
Demand
• Out-of-pocket
• Access to health care
• Ownership
• Solidarity
Supply
• Quality
• Efficiency/ cost
• Risk/ investment
• Data
IFHA
50 mln
HIF
Dutch gov
100 mln
MCF
2 mln
User premium contributions
2-3 mln
Patient• Empowerment
• Willingness to pay
USAID
20 mln
World Bank
5 mln
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Example Hygea (Nigeria)Supply side: Reduced risk and increased investment
• Reduced investment risk due to collateral arrangement consisting of long-term donor commitment through HIF.
• This made it possible for insurer to attract new debt and private equity investments:
Debt capital:
Reduction cost of debt capital by two-thirds FMO/IFC inserted significant new debt capital
Private equity: IFHA significant minority share in insurer Few years later significant capital from venture capital fund Mo Ibrahim
• Total amount of money in the value chain increased 10 times
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