Resource Needs and Funding
for Health Systems
Professor Brook K. Baker
Health GAP (Global Access Project)
Northeastern U. School of Law,
Program on Human Rights and the Global Economy
Seminar: Right to Health: Challenges in Funding,
Health Systems and Universal Access in Development
Policies, Madrid, Spain
June 2, 2010
Outline of Presentation
• Current global health spending: domestic health
spending and development/donor assistance for
health.
• Global health resource needs and financing gaps.
• Campaigning for adequate and sustained donor
financing for health – what should we be doing?
Health Spending in Developing Countries
with 92% of Global Disease Burden is Anemic
• 2004, global health spending $4.1 trillion
• 2003, dev. country health spending $410 billion
World Bank Strategy for HNP Results 2007.
• 2005, health spending in SSA $27 billion.
GHWA Education (2008).
• Out of pocket – 70% in LICs
50% in African countries)
Domestic Resources for Health:
Abuja 15% Commitment; New Revenues
• At the end of 2009, only six African
countries had ever met their 2001
Abuja Declaration commitment to
spend 15% of their budget on health.
• Countries must also pursue a jobgrowth and domestic revenue agenda
– Resource extraction fees
– Tax avoidance and capital flight
– Pro-growth, job-creation policies
Would Meeting Abuja 15% Make a Difference?
USAID Roundtable (2008)
Donor/Development Assistance
for Health
• DAH estimates vary depending on what
is included.
• Actual disbursements are generally
significantly less than commitments.
• A large portion of DAH never hits the
ground.
Kaiser Estimates – DAH 20012007
DAH by Major Component
2007 DAH by Sub-Sector (Kaiser 2009)
Development Assistance for Health
1990-2007
Lancet 2009; 373: 2113–24
Allocation of ODA to Health
Has Increased
But, ODA has stagnated since 2005
Increasing Donor Assistance for
Health is Essential
• “Massive increases in external assistance are needed” to
finance MDG health goals.
(WB, Health Financing Revisited 2006)
• Old estimates of resource needs (CMH & World Bank)
range between $25 billion and $70 billion in additional
aid, per year, to meet MDG health goals. Ibid.
• 2009 estimates from the Task Force on Innovative
Financing has calculated additional global health
resource needs for LICs alone of $45 billion by 2015.
• These estimates may be far low, esp.
when all dev. countries are included.
How big is
the gap?
Who will
pay?
TOTAL DEVELOPING COUNTRY
HEALTH RESOURCE NEEDS AND GAP
2009-2015 (Baker, 2010)
Recurrent Dilemmas in DAH
• Earmarks & conditionalities.
– Only 20% to government budget support.
– Over 50% is off budget and not available
to support the health system or to pay
recurrent public sector costs: staff,
infrastructure, training, management, etc.
– Very high overhead costs, small
percentage hits the ground
• Unpredictable, short-term and volatile.
Recurrent Dilemmas in DAH
• Lack of coordination/harmonization.
• Tied aid and donor-provided technical
assistance.
• Overhead losses.
• Corruption and inefficiency in
recipient bureaucracies.
Subadditionality
• Donor health aid is often fungible, meaning
that countries can disinvest in health at the
same time that donors are investing, usually
as a result of IMF/ministry of finance
macroeconomic restraint policies and
misguided government spending priorities.
IMF Macroeconomic
Fundamentalism
Inflation, fiscal deficit, &
reserve targets
Debt payment first,
reduce unproductive
government spending
Wage caps and
budget ceilings
IMF Macroeconomic
Fundamentalism
Foreign aid is unreliable, must
be discounted
Sustainability –
stay within future
fiscal space
Growth is
secondary to
stability
Hydraulic Pressure →
Subadditionality
• On average, 37% of all additional aid was
indirectly diverted to increase foreign currency
reserves; another 37% was diverted to reduce
domestic debt; only 27% was actually spent.
Figure A2.9.
Poorer, Weaker Countries Spent
Even Less
• Good performers (low inflation, high reserves)
spent 49%, weak performers only 17%.
Poorer, Weaker Countries Spent
Even Less
• Good performers (low inflation, high reserves)
spent 49%, weak performers only 17%.
Sub-Sub-Additionality
• New study shows that for every $1 of
foreign aid, governments may have reduced
their own spending, on average, by $1.14!
– Lu et al., Lancet (2010).
• An unpublished study finds a high
correlation between subadditionality and
IMF loans.
Health Spending Faces Competition:
Food and Fuel Shocks 2007-2008
• Food prices went up 83% from 20052008 and have remained high
• Oil increased over 300% 2003-08 but
has fallen back since
• Global food resource needs estimated
between $20-30 billion a year.
• These price shocks had adverse effects
on imported inflation, government
spending, and currency reserves
Global Recession and
Climate Control
• Current financial crisis: lower remittances,
fewer exports, eroded terms of trade, lower tax
revenue; increased debt, lowered reserves
• Climate control and mitigation resource needs $100 billion/year.
• Global Fund needs $20 billion 2011-2013
• PEPFAR flat-funded FY 2009-2011
What are the prospects for increased
resources for health?
Campaigning for
Global Health Funding
• Mobilizing and allocating domestic resources for
health – long overdue
• Donor achievement of .7% ODA, including .1%
for health – long overdue
• Innovative financing for health, esp. CTL/FTT for
health – an idea whose time has come.
• Attacking IMF macroeconomic constraints and
achieving additionality – long overdue