As the Covid-19 was starting to make its way around the world, just having started in China and the first cases appearing in Thailand, there never was a better time to speak about universal health coverage (UHC) and how to accelerate progress towards achieving this everywhere in the world. The Prince Mahidol Award Conference (PMAC), an annual global gathering focusing on policy-related health issues that took place in Bangkok on Jan 28-Feb 2, facilitated this discussion, focussing on ‘Accelerating Progress Towards Universal Health Coverage’. Director Mariëlle Bemelmans was invited to participate as a panellist in the session ‘Making and Using (Fiscal) Space for UHC’. In her blog she tells about her experience and our ideas on how fiscal space should be used to bridge the still very large funding gap for achieving the world-wide health targets of the Sustainable Development Goals (SDG).
While during the conference there was consensus that public funding is essential to achieve Universal Health Coverage (UHC), and recognition that more attention has been put on Domestic Resource Mobilisation, in her presentation, Mariëlle emphasised the magnitude of the SDG funding gap, and stated that Domestic Resource Mobilisation only will not be enough to realise the SDGs by 2030. She pointed out the need for alternative avenues to expand fiscal space for health and claimed civil society has an important role to explore these: “It is not only up to the health sector; cross-sectoral advocacy, as well as global level advocacy is needed to move from commitment to action on UHC.”
Marielle started out by illustrating the impact of fiscal space challenges through the examples of Malawi and Uganda, two countries where Wemos partnered with national civil society organisations (CSOs) to conduct fiscal space studies focused on financing health personnel. They show dire shortages in the middle of ‘plenty’. Paradoxically, both countries have a relatively large pool of trained, yet unemployed health workers. Nevertheless, even if all these health workers would be employed, the health worker-to-population ratio would still be far below international standards.
“To paint the picture, in Uganda over 15,000 and in Malawi over 3,000 midwives are sitting at home or finding work outside the sector.”
Fiscal space limitations and the associated wage bill ceilings have led to severe absorption problems of staff in the public health system. This is devastating for a country like Malawi, that has some of the highest maternal mortality rates and the highest level of health worker shortages.
Let’s have a closer look at these countries’ fiscal space and the room to increase it. We compare three countries in the region that currently allocate between 1% and 3% of their gross domestic product (GDP) on health (Figure 1). If we consider international benchmarks such as the 5% of GDP to be spend on health[i], there is clearly room for re-prioritising health spending within a country’s GDP allocation.
However, even if these countries would allocate 5% of their GDP, the amount would remain low, with Uganda, for example, spending just above USD 30 on health per capita per year. This falls far below the USD 112 per capita per year benchmark that is regularly referred to in publications of the WHO and others[ii].
But what happens if we anticipate an annual GDP growth rate of 7% by 2030, in line with SDG8? Looking at figure 1, we see that, even then, these countries would lag behind the USD 112 target – which will probably be much higher by 2030. Even though these targets are debatable – they are not context specific and sometimes a range is provided – they are still useful to illustrate the scale of the challenge.
This discrepancy between international benchmarks and national capacity is not relevant only for the countries that Wemos and partners studied. Of the 28 African countries included in figure 2, only 7 would reach the USD 112 benchmark if they would allocate 5% of their GDP to health, as indicated by the yellow bars. The green bars represent the current domestic government health expenditure per capita[iii]. “As you can see, in general, allocating 5% of GDP to health already means more than doubling health expenditure. Politically, this will not be easy to achieve” Mariëlle highlighted while presenting this data, which was picked up and used in the summary of the main messages at the final plenary session of the conference.
The WHO and others have questioned the usefulness of these international targets and benchmarks. We agree that 1) even with less money, progress can still be made towards UHC by spending better, and 2) the estimated shortfall of resources should not be used as an argument to advocate for more private funding as the important solution. As highlighted and substantiated by the WHO, we agree that public funding is essential for UHC. Nevertheless, these benchmarks serve for inter-country comparisons and do show us that resources fall short by a very large margin.
To bring the discussion back to the title of the session, how then can countries expand and use their fiscal space for health? The usual avenues for fiscal space expansion, expressed by the WHO and international financial institutions like the IMF, are the following:
- Reprioritisation of health in government budgets
- Public financial management reforms and efficiency improvements
- Earmarked income and consumption taxes
For the first option, the examples above already showed that re-prioritisation of health in relation to GDP is challenging and that the space it can provide is limited. Also, the second option, improving efficiency, is important but has only a small potential, as it is estimated to bring an additional USD 8 per capita annually in the African region. [iv] Similarly, earmarked taxes, the third option, do not seem to be able to fill the gap. It is estimated that in Malawi, for example, introduction of such taxes would bring only USD 0.63 per capita annually![v]
It is apparent that more is needed, especially for the countries that lag behind the most regarding UHC progress. UN Women and the International Labour Organization (ILO) recently published a handbook on ‘Fiscal Space for Social Protection’, where they suggest alternatives avenues of fiscal space expansion, that may have the potential to fill the gap.
Eliminate illicit financial flows
Maybe this is not the first thing that comes to mind when thinking of ways to finance UHC but, if we think about it, there are huge amounts of money lost due to illicit financial flows; globally, the amount is estimated at USD 500 billion annually! At country level, Wemos and ACHEST’s recent study showed that Uganda lost USD 547 million in 2018. Compare this to its annual health budget of USD 323 million, and the case is clear. Unfortunately, this was a topic hardly touched upon during the PMAC.
Kenya offers a good example of how to address illicit financial flows. The World Bank worked together with the Kenyan Revenue Authority in a capacity building programme after which the Kenyan Revenue Authority successfully negotiated a transfer pricing adjustment, resulting in an additional tax revenue of USD 12.9 million.[vi]
Managing or restructuring debt
Rapidly growing debt service costs are a serious threat to health spending. There are worrisome trends of countries where the external debt service costs as a share of the total government expenditure are actually higher than the budgets for health spending (Eurodad, 2018). 40% of low-income countries are considered to be at high debt risk: twice as many countries as in 2013.
Countries can seek to restructure existing debts, either by debt re-negotiation, relief, or even debt cancellation, as Ecuador did in 2008.[vii] Ecuador held a debt audit, looked at a broader understanding of how (part of) its debt was negotiated and the legitimacy of these negotiations, and discovered that it was illegitimate. As a consequence, significant public resources were freed to be invested in social spending. “Of course, managing or restructuring debts is often politically challenging, but they are important options to consider in expanding fiscal space overall.”
Increasing aid and transfers
Even with increased domestic resource mobilisation, many countries would still depend on Official Development Assistance (ODA) to raise sufficient funding for UHC. But donor OECD countries are still lagging behind the international commitment of allocating 0.7% of their Gross National Income (GNI) to ODA, a target that exists since the 1970s and has been repeatedly re-endorsed (figure 3). Only five countries have overpassed or are right on target, and the average country effort is stuck at 0.38%.
Besides donor countries increasing their allocations to ODA and meeting their commitments, alignment of aid and global health initiatives like the Global Fund, Gavi and the Global Financing Facility, can also bring significant gains. And civil society can play an important role for both objectives: both more and better ODA. A recent instrument for alignment of aid is the Global Action Plan for Health Lives and Well-being (the GAP), launched in September 2019 during the High-Level Meeting on UHC in New York. Civil society, including Wemos, responded to that with the “Watch the Gap” initiative. Through this initiative civil society will follow the implementation of the GAP, as well as its political and practical implications. And they will hold Global Health Initiatives accountable for their commitments.
Key messages and take-aways
Fiscal space should be determined by the health needs of the people, not by the ability to pay or macro-economic conditions in a top-down approach. The avenues that are indicated by the WHO and international financial institutions to expand and use fiscal space for health are key. However, they are not enough. We should not underestimate the size of the gap for UHC and the SDG3 we are still facing. To close this gap, is a matter of global justice and global solidarity!
Ministries of Health and national CSOs are in a strong position to advocate what is needed. Looking back at the PMAC though, we cannot avoid commenting on the fact that civil society participation was limited. However, our presence in such high-level conferences is very important. Civil society can and should steer the discussion around topics that are often overlooked, like the global responsibility for financing UHC, international tax justice and illicit financial flows.
Our presentation led to some interesting comments from the audience and Marielle’s co-panellists. Nathaniel Otoo from Ghana, commented that “You are broadening the discussion, that’s good. We should look at it from a global perspective.” He added that Ghana has been working on health insurances for 17 years now, but still only 45% of population is covered. This illustrates some of the health financing challenges that low- and lower middle-income countries face.
The People’s Health Movement (PHM), despite in a small number, were quick on their feet asking critical questions and making sharp remarks. Ravi Ram from PHM commented on the issue of international tax justice, saying: “Leave no corporation behind, in paying their share for health and social services”.
Ajay Tandon of the World Bank mentioned: “We see that other sectors, like education are better at underscoring their importance towards health, and thus are able to prioritise their sector in the government allocation. We should do better in underscoring the same vice versa (how health is important for education).”
Wemos believes that the international community can
and should contribute more to the strengthening of countries’ health
budgets. We continue to advocate for equitable health financing, pooled public
resources for health and strong health systems that are responsive to the needs
and accessible to everyone, regardless of their income.
- The Prince Mahidol Award Conference (PMAC) was held in Bangkok from Jan 28-Feb 2. To read more, visit: https://pmac2020.com
- For more information about the “Watch the GAP” Task Group, launched in Kampala (2019), please go to: https://www.medicusmundi.org/watch-the-gap/
[i] McIntyre et al., 2017: https://www.cambridge.org/core/journals/health-economics-policy-and-law/article/what-level-of-domestic-government-health-expenditure-should-we-aspire-to-for-universal-health-coverage/B03E4FAA9DB51F4C9738CB584C9C8B31
[ii] Stenberg et al., 2017: https://www.thelancet.com/journals/langlo/article/PIIS2214-109X(17)30263-2/fulltext
[iii] The graph shows data from 2017, the most recent available data by the WHO.
[iv] Barroy et al., 2016: https://www.who.int/health_financing/documents/assessing-fiscal-space/en/
[vi] World Bank, 2016: http://documents.worldbank.org/curated/en/502341468179035132/pdf/104568-BR-SecM2016-0112-IDASecM2016-0071-IFC-SecM2016-00423-MIGA-SecM2016-0044-Box394878B-PUBLIC-disclosed-4-5-16.pdf