fiscal space for the tanzanian health sector · policy background and question strong economic...

Chris James, Tomas Lievens, Alexandra Murray -Zmijewski , Jehovaness Aikael i , Paul Booth

Fiscal space for the Tanzanian health sector

December 9th, 2014

Outline of presentation

Presentation of analysis

– Policy question

– Approach and methodology

– Main findings

Focus on questions of interest to this session

DD Month YYYY © 2014 Oxford Policy Management Ltd 2

Policy background and question

Strong economic growth past decade but annual fiscal deficit >5% & debt to GDP ratio 45%

Spending has been guided by MKUKUTA in 2007/8 – 2012/13 => health is not a priority & share of general government revenue to health: 9.4%

Fiscal decentralisation: 40% of health expenditure goes through LGA

Main sources of expenditure (2009/10)(change from 2002/3)

– Donors: 40% ↑

– Households: 32% ↓

– Government: 25% ↔

Policy question: What is the level of financial resources that Tanzania can

make available for the health sector? How and over which time period will Tanzania be able to generate enough resources for UHC?


How did we go about it?

14 October 2014 © 2014 Oxford Policy Management Ltd 4

Resource needs • 5% of GDP public spending or USD 86 per capita to

ensure universal coverage for a basic package of services



Resource gap ‘business as usual’ Does financing policy status-quo generate enough fiscal space?

If not, what is the resource gap?



Additional fiscal space for health and HIV What is room for additional domestic resource mobilisation? • Increased public spending • Innovative sources of funding • Health sector efficiency • Borrowing



Resource gap with ‘additional money for health and HIV’

Would additional domestic resources be sufficient to finance policy ambitions in health and HIV?

Findings

Large and increasing basic funding gap under ‘policy as usual’

– Government health spending remains 6% discretionary spending

– Health insurance rising to 13% of THE

– In 2024/25 gap is 11% of GDP / 46% of government budget


Findings

Additional sources of funding

– Prioritisation of health in budgeting process

15% of GGE to health in 2024/25

USD 773 million per year extra on average

Covers 11% basic and 8% wider gap

– Health insurance coverage

Current growth path 11% THE in 2013/14 to 13% in 2024/25

Accelerated growth 50% THE in 2024/25

Covers 42% basic and 30% wider gap


Findings

Current versus accelerated coverage by insurance


Findings

Innovative financing mechanisms


M USD

As % Wider Financing Gap

As % Minimum Financing Gap

Alternative Funding Sources M USD 246 -4.0% -2.9%

Alternative Funding Sources M TzSh 461,173 -4.0% -2.9%

Earmarked Taxation 385,092 -3.3% -2.4%

Remittances Levy 2,084 -0.02% -0.01%

Airtime Levy 68,785 -0.6% -0.4%

Alcohol Levy 256,381 -2.2% -1.6%

Airline Levy 57,842 -0.5% -0.4%

Mainstreaming 76,080 -0.7% -0.5%

Private sector mainstreaming 76,080 -0.7% -0.5%

Findings

Efficiency savings


Findings

Basic financing gap with additional resources


Findings

Revenue from natural resources


Findings

Conclusions

– Tanzania not on a path to achieve UHC for a basic package of services in medium term

– Tanzania can take a number of policy initiatives to better align policy objectives with fiscal reality

Health as a policy and budget priority

Improved planning and budgeting

Health insurance is vital

Alternative financing

Efficiency savings

UHC costing study

Lobby for international health funding


Questions

What information is needed to understand and negotiate realistic government

health spending scenarios?

– Macro economic information

– Agreed assumptions for forward planning

– NHA data

– Government spending data

– Health insurance actuarial data

– Efficiency savings


Questions

How do fiscal and administrative decentralization interact with issues of

sustainability and fiscal space? What additional challenges do they raise?

– Analytically: check data include or not LGA transfers

– Absorptive capacity comparison central and LGA spending

– Effective and efficient use of health resources


Questions

How can policy-makers ensure stability and predictability in the flow of funds to health from the budget?

– Differences between volatility in budget and spending

– PFM bottlenecks prevent full absorption => MOF reason to keep budget stable may be disingenuous

– Volatility and lack of predictability in budgeting to a large extend related to donors

– Engage budget authorities in need for long term planning and expenditure

– Provide projected cost and expenditure

– Shift financing to (off-budget, independently run) health insurance


Questions

Have health sector policy-makers been successful in earmarking more funds

for health and what practical lessons and issues arise (beyond what theory is

telling us – “successes” and “failures” and the intrinsic concerns of Ministries

of Finance against reduced fiscal policy flexibility)?

– MOF face choice between earmarked taxes and loss of flexibility, or higher

allocations to health out of general budget with flexibility

– Earmarked taxes are relatively small in comparison with higher allocation to

health from government revenue

– Earmarked taxes can be a two-edged sword / ensure additionality

– Earmarked taxes can help to manage and smooth financing transitions e.g.

HIV from donor dependent to budget funded


Questions

Are there other options and mechanisms to operationalize a prioritization

process for health in the public budget and to assure stability in funding flows

including during times of economic crises?

– Budget literacy is a necessary condition

– Demonstrate health spending contributes to national planning objectives

(‘health is wealth’)

– Leverage health system efficiency and effectiveness reform to obtain

higher allocations to health

– UHC is a society-wide project requiring long-term commitment from

different parties => create UHC governance bodies attached to prime

minister / president


Questions

Where does efficiency fit into this discussion? How does the “capture” of

efficiency gains (e.g. within facility, within the health sector, or back to the

Treasury) play out in practice, and what are the links to PFM rules?

– Commitment to greater efficiency is powerful in long term commitment for

increased budget for health

– Efficiency savings often longer term and difficult to quantify

Programme budget can provide mid-way solution

– Strategic purchasing reform => ensure efficiency savings are available to

health sector


Thank you

fiscal space for the tanzanian health sector · policy background and question strong economic...

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