David B Evans Department of Health Systems Financing (HSF)

1. Health System MetricsTechnical meeting September 28-29 2006Monitoring Health Financing Changes David B Evans Department of Health Systems Financing (HSF) Evidence and Information for Policy (EIP)

2. Outline • History • Recent Developments • Monitoring Changes Evidence and Information for Policy (EIP)

3. Stewardship (oversight) Responsiveness (the way people are treated and the environment) Resource development Service delivery (provision) Health Financing (collecting, pooling and purchasing) Functions and Goals of Health System GOALS / OUTCOMES OF THE SYSTEM FUNCTIONS THE SYSTEM PERFORMS I N P U T S Quality Coverage Fairness in financial contribution Efficiency Evidence and Information for Policy (EIP)

4. Objectives of Financing Function • to generate sufficient and sustainable resources for health to enable the health key health system goals to be achieved; • to ensure people who need key health interventions can access them; • to ensure that the method of raising funds for health does result in financial catastrophe or impoverishment Important contributing factor: available funds are used effectively, equitably and efficiently Evidence and Information for Policy (EIP)

5. Ideal Criteria for Financing Metrics A change in one direction unambiguously is good or bad, at least for poor countries (i.e. the indicators are not just descriptive) Feasible to measure regularly Comparable – over time, maybe across countries Parsimony Evidence and Information for Policy (EIP)

6. Proposed Essential Indicators Adequacy of funds: health expenditure - per capita and as a percentage of GDP. Although it is not necessarily true that increasing expenditure is desirable in all settings, there is an unequivocal relationship between health expenditure per capita and health levels. Although there is concern in many of the OECD countries that expenditures are rising too fast, in poor countries it is generally desirable to increase health expenditures so as to reach better health system outcomes. Financial risk protection: The proportion of the population incurring catastrophic health expenditure and the proportion impoverished as a result of out-of-pocket payments at time of delivery. A movement in one direction is unequivocal Evidence and Information for Policy (EIP)

7. Strongly Desirable Adequacy of funds - Govt commitment to health: The proportion of general government expenditure devoted to health. As with GDP, it is not necessarily desirable to increase this proportion in all settings, but in many low income settings the proportion attributed to health can be considered to be too low. Note: Some low-income countries already allocate over 10% of General Govt Expenditure to health Financial risk protection: The share of total health expenditure that is prepaid (or the share paid out-of-pocket). This indicates the degree of risk pooling and solidarity. In poor countries the level of prepayment is extremely low so an increase is desirable. On the other hand, it is not necessarily true that 100% prepayment is desirable. Most countries impose some form of payment at point of service to discourage "over-use". Evidence and Information for Policy (EIP)

8. Desirable? The proportion of health expenditure (or general government expenditure) financed by external sources. An indicator of sustainability. Problem – we want this to go up in the poor countries in the short to medium term. E.g. we know that poor countries will not be able to afford to finance even a basic set of interventions from domestic resources for a long time. Evidence and Information for Policy (EIP)

9. Recent Developments World Health Assembly: resolution on Sustainable health financing, universal coverage and social health insurance, May 2005 Urged countries to develop health financing systems that: Allow all people access to needed services; Without the risk of financial catastrophe and impoverishment Emphasized the need to increase risk pooling and prepayment when there is a high reliance on out-of-pocket payments Evidence and Information for Policy (EIP)

10. Key Questions Are there sufficient resources for health? Are they raised in a way that protect people from financial catastrophe and impoverishment? Are they used effectively, efficiently and equitably? Are people prevented from using needed services because of a shortage of funds or because of the way funds are raised? Evidence and Information for Policy (EIP)

11. Monitoring Changes Are sufficient funds available? THE per capita and/or THE/GDP – should a minimum threshold be set and the level monitored compared to the threshold, instead of the simply monitoring the level or proportion of GDP? GGHE/GGE – is it important to monitor routinely à la Abuja Declaration? Measurement Issues: THE, GGHE, GGE reported for all 192 countries each year by WHO. GGHE and GGE more reliable than THE in some settings – problems with Private Exp, particularly OOPs. Evidence and Information for Policy (EIP)

12. Monitoring Changes - 2 Are people protected from financial catastrophe and impoverishment associated with the way funds are raised? a. % of HH suffering financial catastrophe and impoverishment due to OOPs – easy to interpret, more difficult to measure accurately b. The share of THE that is prepaid (or that is OOPs) – less easy to interpret. Can be derived from WHO's health expenditure reports each year. No obvious threshold measure. Measurement Issues: good estimates of ∆OOPs requires intermittent HH surveys Methodological problems Evidence and Information for Policy (EIP)

13. Monitoring Changes - 3 No good financial indicators of: A. the extent to which people cannot use services because of financial constraints B. the overall equity and efficiency of resource use – the purchasing/provision function Self reported non-use when reporting illness and self reported reasons – have been used for 1A, but major problems - leave to discussion on effective coverage? ∆efficiency – could be based on effective coverage or frontier production functions. Computational problems. Problems with acceptance ∆equity of resource use – could look at sub-national geographic distribution of resources, benefit-incidence analysis. Can discuss pros and cons. Evidence and Information for Policy (EIP)

14. Conclusions Many indicators can be used to describe and compare components of financing systems – revenue raising, pooling and purchasing/provision Parsimony: have recommended 2 core indicators in the past. Can be used to monitor changes over time Questions: Should we move to a threshold indicator for adequacy of expenditure (still requires THE in US$ or I$ to be calculated)? Do we recommend the "desirable" indicators as well? Should we be trying to define indicators for financial constraints to use of needed services, and for the equity and efficiency of resource use? Answers have implications for how best to build capacity in countries Evidence and Information for Policy (EIP)