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How Much Can South Africa Spend on NHI ? A Fiscal Health Analysis

How Much Can South Africa Spend on NHI ? A Fiscal Health Analysis. Jack Langenbrunner World Bank December 2011. Impact on Health Services – Health Care Provider Response. Impact on Coverage – Health Outcomes, Health Expenditures.

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How Much Can South Africa Spend on NHI ? A Fiscal Health Analysis

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  1. How Much Can South Africa Spend on NHI?A Fiscal Health Analysis Jack Langenbrunner World Bank December 2011

  2. Impact on Health Services – Health Care Provider Response Impact on Coverage – Health Outcomes, Health Expenditures

  3. Spending More Public Funds on HealthWhat Should We Spend or What Can We Spend? • “Should” • Messier/more difficult to measure • Social preferences • Policymakers decide relative to other sectors like Education • “Can” • Assessment of Fiscal Health • Links Health sector to bigger Macro-economic picture

  4. How Much Can a Country Spend?Accounting for Government Spending on Health Gov’t health spending Total gov’t spending Gov’t health spending X = GDP GDP Total gov’t spending Government health spending as share of the economy Fiscal Capacity Public Policy Priorities Adopted from Kutzin, 2009

  5. Fiscal Context/Fiscal Capacity

  6. How Much Can a Country Spend?Accounting for Government Spending on Health Gov’t health spending Total gov’t spending Gov’t health spending X = GDP GDP Total gov’t spending Government health spending as share of the economy Fiscal Capacity Public Policy Priorities Adopted from Kutzin, 2009

  7. How Much Can a Country Spend?Accounting for Government Spending on Health Gov’t health spending Total gov’t spending Gov’t health spending X = GDP GDP Total gov’t spending Government health spending as share of the economy Fiscal Capacity Public Policy Priorities A … Adopted from Kutzin, 2009

  8. How Much Can a Country Spend?Accounting for Government Spending on Health Gov’t health spending Total gov’t spending Gov’t health spending X = GDP GDP Total gov’t spending Government health spending as share of the economy Fiscal Capacity Public Policy Priorities A D- Adopted from Kutzin, 2009

  9. New Taxes…are these needed?

  10. Fiscal Space? Source: South Africa: 2010 Article IV Consultation, IMF, September2010

  11. External Debt Climbing… Source: South Africa: 2010 Article IV Consultation, IMF, September 2010

  12. But…Still Favorable Compared to EU

  13. Beware Tax on Private Sector LaborEvidence in the OECD 1980-2006 Wagstaff, World Bank, 2009

  14. Avoid Tax on Private Sector LaborEvidence in the OECD 1980-2006 South Africa level of informality already high at 37% Wagstaff, World Bank, 2009

  15. 2) When Contributions Are Linked to Coverage: Many Have No Insurance Countries Get Stuck

  16. A Better Idea • Increasing General Revenues • Germany (next slide), France, China, Thailand, Moldova… • Earmarked taxes may be an option • Often criticized from a public finance perspective, but tend to be a popular option used by countries. • Thailand has employed “sin taxes” to fund health promotion. • Ghana has 2.5% VAT for health insurance fund. But, regressive in South Africa • Can sin taxes be raised further in the future?

  17. Sickness Funds Germany Increased Reliance on General Revenues Tax Subsidies€ 15.5 bn Contributions€ 159.0 bn Liquidity Reserve€ 4.2 bn Additional Premia€ 0.7 bn Central Health Fund Physicians€ 28.5 bn Hospitals€ 57.4 bn Drugs€ 30.0 bn Other€ 45.2 bn 2010 figures OECD, November 2011

  18. Taxes on Tobacco: Better Idea?

  19. The Bigger Issue:Reprioritizing Health as a Government Expenditure Priority Russia Kutzin and WB, 2011

  20. Final Note… Implementation Issues

  21. There is a Long Road to Universality Source: Hsiao, 2005

  22. National Health InsuranceComplex Activities Take Time… • Collection • Pooling • Benefits Package • Contracts • Payment Systems • MIS systems • Claims Processing • Quality Assurance • Regulations • Forecasting • …

  23. The Path to Universal Coverage:…Indonesia, Philippines, Vietnam, China, Cambodia

  24. Institutional and Societal Factors Strong and sustained economic growth Long-term political stability and sustained political commitment Strong institutional and policy environment High levels of population education Policy Factors Commitment to equity and solidarity Health coverage and financing mandates Financial resources committed to health, including private financing Consolidation of risk pools Limits to decentralization Primary care focus Implementation Factors Coverage changes accompanied by carefully sequenced health service delivery and provider payment reforms MIS -- Good information systems and evidence-based decision-making Strong stakeholder support Efficiency gains and copayments used as financing mechanisms Flexibility and mid-course corrections Success Factors in ‘Good Practice’ Health Coverage Expansion Reforms Source: Gottret Schieber, and Waters, Good Practices in Health Financing, World Bank, 2008 Note: Countries included in the study -- Chile, Colombia, Costa Rica, Estonia, Kyrgyz Republic, Sri Lanka, Thailand, Tunisia, and Vietnam

  25. Thank Youjlangenbrunner@worldbank.org

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