Political Economy Challenges in Health Financing: Capacity Development Illustrated

1. Political economy issues and systems capacity development - illustrated for health financing - Presentation prepared for the GTZ/GIZ Forum 2011Inke Mathauer, MSc., PhDDepartment of Health Systems Financing

2. Outline • Political economy analysis: - Main actors and relations, typical interests and conflicts - Understanding institutions, organizations and incentives • Capacity development to strengthen accountability relationships • Political economy challenges to systems capacity development • Way forward and implications for system capacity development

3. Main health financing actors and relations, typical interests and conflicts Politicians (national level) Development partners Other ministries (Labour, Social Sec, Finance) MOH policy makers NGOs/ civil society Provincial/district health administration Politicians / local government SHI/CBHI Fund(s) PHI Provider associations Government hospitals Government clinics NGO providers Private providers Citizens, patients (population groups, income quintiles, ….)

4. Main health financing actors and relations, typical interests and conflicts Politicians (national level) Development partners MOH policy makers Other ministries (Labour, Social Sec, Finance) NGOs/ civil society Stewardship Provincial/district health administration Politicians / local government SHI/CBHI Fund(s) PHI Voice Strategic purchasing Provider associations Government hospitals Government clinics NGO providers Private providers "Client power" Citizens, patients (population groups, income quintiles, ….)

5. Main health financing actors and relations, typical interests and conflicts Politicians (national level) Development partners Other ministries (Labour, Social Sec, Finance) Visibility, quick results, influence, development change, aid effectiveness MOH policy makers NGOs/ civil society Universal coverage, large MOH budget, power Politicians and local government SHI/CBHI Fund(s) Provincial/district health administration PHI Re-election, prosperous district Efficient service delivery, cost-containment, adequate benefits for members, affordable contributions, maximization of membership Profit, market share, client satisfaction Max. resource availability, health services availability, good health outcomes Provider associations Adequate working conditions, pay, protection Government hospitals Government clinics NGO providers Private providers Adequate/profitable remuneration, manageable patient load, clinical autonomy Citizens, patients (population groups, income quintiles, ….) Financial access to health services, with different preferences for private sector, also depending on cost-sharing affordability

6. One of the proposals for the SHI framework in Benin Reality is even more complex: Example from Benin

7. Political economy analysis:Understanding institutions, organizations, interests and incentives in health financing Institutional design of health financing: • Rules, legal / regulatory provisions, specifying the health financing functions (reforms are a package of new/revised rules) => Rules have a purpose and oblige or enhance individuals or organizations to behave in a certain way, usually by means of enforcement characteristics (incentives, disincentives, constraints). Organizational practice of health financing: • mainly determined by power relations and the organization's / individuals' specific interests, shaped by • self-interest, profit maximization, work conditions, staff needs for recognition and status, preferences, informal rules, solidarity motivations, etc. <= Incentives and disincentives derive from the benefits or disadvantages that actually or potentially accrue to individuals due to health financing rules or other rules.

8. Designing rules / reforms Health financing actors try to shape rules (reforms) along their interests Frequent deficits in institutional design: • Absence of rules (e.g., lack of PHI regulation) • Inadequate rules (e.g. fragmented SHI membership groups) • Non-aligned rules (e.g., minimum contribution not in line with real minimum wage) Implementing rules / reforms Health financing actors may/may not want or be able to comply with rules, i.e. implement rules (reforms) Frequent deficits in organizational practice: - Weak enforcement of rules (e.g., weak inspection) - Non-conducive inter-organizational relationships (e.g., little info exchange between ministries) - Weak organizational capacity Core aim: understanding root causes of poor performance

9. WHO'sOASISapproachInstitutional and Organizational ASsessment for Improving and Strengthening HF • Health financing system review and performance assessment • Detailed institutional-organizational analysis to identify the strengths and deficits in institutional design and organizational practice • Map actors and stakeholders • Identify incentives and interests => Understand reform agendas/arenas and potential entry points • Identifying / assessing context-appropriate options and reforms that contribute to moving towards universal coverage • Anticipation of reform impacts • Assessment of political/technical/institutional/implementation feasibility • Assessment of financial implications

10. Capacity development activitiesto enhance accountability relationships- aligning stakeholder incentives with policy objectives - between citizens and politicians/policy-makers: • Support development of a health financing policy/strategy • Clarification of strategic choices that a country has to make • Stronger focus on process management (wide stakeholder consultations) • Reinforce Ministries of Health in their negotiation capacity and "economic speak" with Ministries of Finance • Support reform development and reform implementation capacity • Strengthen organizational capacity of health committees and district health administrations in planning, budgeting, monitoring • Provide support to particular civic associations for their lobbying • Support benefit package (re-)definition to better address needs

11. Capacity development activitiesto enhance accountability relationships (cont.) - aligning stakeholder incentives with policy objectives - between users and providers: • Support coverage increase via pooled prepayment • Promote targeted demand-side strengthening (vouchers, subsidized premiums, exemptions from cost-sharing) for low-income groups • combined with provider choice and some degree of provider autonomy • Strengthen community monitoring schemes of provider performance • Include utilization rates as one criteria for provider remuneration

12. Capacity development activitiesto enhance accountability relationships (cont.)- aligning stakeholder incentives with policy objectives - between providers and purchaser (strategic purchasing): • Promote provider autonomy • Promote revision of provider remuneration to set right incentives for equity and efficiency, e.g. • Clear and enforceable contracts • Move to a mix of provider payment mechanisms • Results-based/ performance-related payment • Needs based formula for resource allocation from national to subnational levels

13. Political economy challenges to system capacity development in health/social protection • "Technical" aspects + their efficiency / equity impacts are complex • What is a "good enough" and feasible institutional design in a given context? • Enormous complexity for system capacity development in health: • Multiple actors,overlapping sub-systems, policy agendas, reform arenas, sector governance, decision-making structures: Where, when and how to enter? • Public/societal objectives (equity, universal coverage) vs. private interests • (Limited) notions of solidarity cannot be changed quickly; expectations by the middle class as an important voting group • Political economy concerns within the development partner community • Duplication, fragmentation, competition among development partners • Donor programs are power assets for policy makers/senior MOH staff • Accountability towards their own citizens (need for quick results)

14. Way forward and implications for (bilaterals') system capacity development • Need for a (more explicit) political economy analysis of potential impacts of capacity development activities, also of development partner arena in health sector – jointly undertaken • Alignment of donor staff incentives with the Paris Declaration logic • Visibility versus coordinated, harmonized donor actions? • Stronger support to and guidance of donor actions by national health sector plans • All development partners' activities should be integral part of the Government's Program; no channeling of funds / support that fragments or bypasses the country structures • Speaking with one voice, donor partnerships (e.g., P4H, IHP+)

15. Thank you! Questions? Comments!

16. References Mathauer I and Carrin G (2010): The role of institutional design and organizational practice for health financing performance and universal coverage, Health Policy, doi: 10.1016/j.healthpol.2010.09.013. also available as Discussion Paper, DP5-2010, Health Systems Financing Department, Geneva: World Health Organization; 2010. http://www.who.int/health_financing/documents/dp_e_10_05-instit_uc.pdf. Mathauer I and Carrin (2010): OASIS. A tool for Health financing system reviews - Performance assessment - Options for improvement, Geneva: WHO, Department of Health Systems Financing WHO (2010): World Health Report 2010: Health systems financing – a path to universal coverage, WHO: Geneva. www.who.int/health_financing