Will there be enough money for HIV/AIDS in 2031? Evidence from the health expenditure literature

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



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



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


(0.48)(0.48)


(0.07)(0.07)

Logarithm of health ODA/capitaLogarithm of health ODA/capita 0.1380.138 ****

(0.06)(0.06)


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


(0.23)(0.23)


(0.03)(0.03)

Logarithm of health ODA/capitaLogarithm of health ODA/capita 0.020.02

(0.06)(0.06)


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


And what happens with Gross Health Expenditures per capita when we add the growth of external resources per capita?





External Resources for Health/capita growth rate 0.03***



..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*



External Resources for Health/capita growth rate -0.035***


Crowding Out?


Are Health Care Expenditures “recession-proof”?



Positive GDP/c growth rate 0.64***

Negative GDP/c growth rate 0.71***


…they are not


…and the result holds when we only look at SSA countries…




Negative GDP/c growth rate 0.63***



…but it doesn’t hold for OECD countries.




Negative GDP/c growth rate -0.51*


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)

Will there be enough money for HIV/AIDS in 2031? Evidence from the health expenditure literature

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