centre for health economics and developemnt estimating economic and fiscal impact of health and non...

CENTRE FOR HEALTH ECONOMICS AND DEVELOPEMNT

ESTIMATING ECONOMIC AND FISCAL IMPACT OF HEALTH AND NON HEALTH EXPENDITURE FROM THE NATIONAL

HEALTH BILL

Kenneth OjoCentre for Health Economics and Development,

Abuja, Nigeria


Background

The expansion would bring: • New federal funding from the consolidated

revenue fund to subsidize increase coverage; • New State and Local government costs for

that coverage (particularly as these are counterpart fund.);

• Economic and tax revenue impacts resulting from new funds being spent throughout the Nigerian economy.


Focus of the studyEconomic, Fiscal and Health impacts of National

Primary Healthcare Development Fund (NPHCDF) provided in the national health bill.

In other to understand the simulation model for projecting the National Primary Healthcare Development Fund (NPHCDF) for over 10 years period, we first provide information on the fiscal structure for revenue allocation to various tiers of government with the various sources of fund for the consolidated revenue fund of the federation.


Figure1: Revenue Allocation to various tiers of Government in Nigeria


Methodology

The NPHCDF is expected to be used at primary health care level to purchase minimum package of health care, essential drugs, human resources for health, maintenance of equipment and other infrastructure etc. To this effect, we propose to consider the following as the key components for projections under the simulation model:

Component 1: The consolidated revenue fund of the federation will be projected under certain macroeconomic conditions - Gross domestic product (GDP), Real growth rate of GDP, Percentage change in GDP deflator - over the next ten years


Methodology Cont’d.Component 2: The grants by international donor partners will

be projected over the simulation period using current data for the baseline and projecting under certain macroeconomic conditions.

Component 3: We propose innovative financing as the other sources of funds that may come into the NPHCDF. We will identify some of the viable ones (Airline levy, Mobile, etc) and make projection with realistic assumptions over the next ten years.

Component 4: Need for assumptions regarding the issue of attrition: Can we attribute all the impacts to health expenditure alone? This is one of the major limitations in economic modelling.


Data Collection

Literature search and reviews on relevant studies on economic impact analysis, cost effectiveness analysis and other economic evaluation studies.

Collection of data from Secondary sources.In depth interviews of public officials from

Federal Ministry of Finance and Federal Ministry of Health.


Is it Economic impact analysis or Cost Effectiveness Analysis (CEA)?

The national health bill provides for mobilization of additional funding for the health sector to the NPHCDF from the consolidated revenue fund of the federation, donors and other innovative financing sources and not necessarily comparing alternative financing intervention strategies. The funds are not set of options but one composite fund.

As may be aware, Cost Effectiveness Analysis (CEA) is a type of economic evaluation that examines both the costs and health outcomes of alternative intervention strategies. In CEA, the economic cost of a health intervention is divided by an estimate of the health effects: the interventions with the smallest ratios are considered to be the most cost-effective. By this approach, health interventions can be ranked according to their cost effectiveness ratios, and the most cost-effective programs selected as health priorities for funding by governments.


Cont’d

Therefore, our approach may not be to identify the most cost-effective strategies from a set of options that have similar results. In order words, we are not going to compare costs with outcomes and select the one with the lowest cost effectiveness ratio. Although we will still estimate the health outcomes from health expenditures as part of our work stream. See the section below.


Economic and Fiscal Impact Model

In essence, part of the expectation from this assignment is to develop a model for estimating economic and fiscal impact of health and non health expenditure from the NPHCDF. For example, we will use the spending estimates to calculate the economic and fiscal impacts resulting from the national health bill. The analysis will consider three primary economic impact categories:

1. Economic impacts due to increased spending within the benefiting states and local governments from NPHCDF (including increased business activity, increased personal wealth, and increased employment); It is stipulated in the National health bill that for any State or Local Government to qualify for the block grant, such State or Local Government shall contribute certain percentage to the total cost of projects. These will be additional spending from the states and local governments.


Economic and Fiscal Impact Model Cont’d.

2. Increases in state and local governments tax revenue generated by new economic activity; and3. Budgetary spending and savings resulting from the incremental increase in coverage through NPHCDF and additional spending form state and local governments.Given that this will be an economic and planning

simulation tool, we are proposing that each of the impacts is considered over the ten-year period from 2014 to 2023. As we are proposing to work under uncertainties, it will be unrealistic to go beyond 10 years. Tax and budgetary impacts will be calculated at the state and local levels.


Health Impact Analysis

Notwithstanding, we will still estimate with available health data and realistic assumptions on the health outcomes from health expenditures. These health effects could be measured as the number of live save; number of quality-adjusted life years (QALYs) gained from interventions. QALYs are a useful measure for programs that primarily reduce morbidity rather than extend life. However, may need to expand our assumptions and the data base to extend our measurement in terms of number of disability-adjusted life years (DALYs) gained from interventions

The health benefits will be on the family/households, mothers and babies. With data on the population structure, current utilization rates across the population structures, information on key health interventions and their coverage rates, results from existing studies, we can extrapolate with assumptions to calculate the percent coverage in key health interventions across the defined population structures.


Development of the Comprehensive Report and Policy briefs

There will be a comprehensive report on the analysis. In

addition, we propose to develop series of policy briefs from the analysis as communication and advocacy tools to convince the various policy making constituencies of the urgency of the passing the bill into law. We will ensure that all aspects of the policy briefs will be strategically focused on achieving the intended goal of convincing the policy communities.


END

MANY GOOD WISHES AND THANKS

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