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

1. Will there be enough money for HIV/AIDS in 2031?Evidence from the health expenditure literature Jacques van derGaag William McGreevey Vid Štimac

2. Outline • Something old • Something new • Interim results • Towards a dynamic model • Will there be enough money? • Discussion and conclusions

3. Introduction • Health Expenditure per capita can almost perfectly be predicted by GDP per capita

4. Relation Health Exp/cap and GDP/cap Using current international US$ rates... (most of ) Sub Saharan Africa Source: Authors’ calculations, WHO and IMF data, 2004

5. Relation 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

6. Introduction • Health Expenditure per capita can almost perfectly be predicted by GDP per capita • The public share does not increase health expenditures per capita (crowding out private expenditures)

7. Relation Health Exp/cap and GDP/capand the Public Share

8. Introduction • Health Expenditure per capita can almost perfectly be predicted by GDP per capita • The public share does not increase health expenditures per capita (crowding out private expenditures) • ODA does increase the public share (but see point 2)

9. Relation Public Share and Health ODA(Current US$)

10. Relation Health Exp/cap and Health ODA (Current US$)

11. Projections • 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.

12. Growth Prospects 2005-2030

13. Health expenditures per capita for LIC and MIC countries 2006, 2015, 2030, in US$

14. Interim conclusions • 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 • 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

15. Growth Rate Model • How does GDP per capita growth relate to Health Expenditures per capita growth?

16. Growth Rate Model • And what happens with Gross Health Expenditures per capita when we add the growth of external resources per capita?

17. Growth Rate Model • ..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? Crowding Out?

18. Growth Rate Model • Are Health Care Expenditures “recession-proof”? …they are not

19. Growth Rate Model • …and the result holds when we only look at SSA countries…

20. Growth Rate Model • …but it doesn’t hold for OECD countries.

21. Projected aggregate health care expenditures per region (in millions US$)

22. Projected aggregate health care expenditures per region (in millions US$)

23. World regions, population, per capita health spending, 2005 and 2030

24. Prospects for health spending Sub Saharan Africa in 2004 In 2004, 34 out of 47 SSA countries, on less than $50/capita…

25. Prospects for health spending Sub Saharan Africa in 2030 …in 2030, still27 out of 47 on less than $50/capita…

26. SSA countries with projected Health Expenditures/capita < $40

27. SSA countries with projected Health Expenditures/capita < $40 (cont.)

28. SSA countries with projected Health Expenditures/capita < $30

29. Discussion 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

30. What to do with low-income countries that suffer from low growth rates and often from high HIV/AIDS prevalence levels? • MoreODA? Business as usual won’t work! • What about Off-Budget support? • HIV/AIDS exceptionalism • Cannibalization of existing health care infrastructure • Need for integration in health system development • Any other ideas?

31. Towards a new approach • Development of voluntary low-cost health 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)