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Health Financing in South Asia
Health System Objective & Socioeconomic Overview: Achievements & Challenges
South Asia Regional Forum on Health Financing
Maldives, June 2-4, 2010
Pablo GottretGeorge SchieberWorld BankSouth Asia Region
Key Messages
1. Underlying demographics, epidemiology, and economic situations determine underlying ‘needs’ and ability to meet those needs
2. Reforms must be tailored to individual country socioeconomic, political, and geographic circumstances – no magic bullets or one size fits all solutions exist
3. Governments should design policies consonant with the economic principles of equity, efficiency, affordability and sustainability, which underlie the revenue collection, risk pooling, and purchasing functions of health financing
4. Policy instruments must line up with the objectives to be achieved, but policy reforms are often more politically than technically driven
5. Financing reforms must also be accommodated within a country’s current and future ‘fiscal space’
6. Financing changes must be coordinated with all other health systems reform efforts
Outline of Presentation
Pablo’s Presentation• SAs Underlying Socioeconomic Situation• SAs Current Health Financing Baseline George’s Presentation• Health Financing Functions, Objectives, and Models
– Revenue collection and fiscal space• Revenue collection and tax policy• Fiscal space and macroeconomic management
– Risk pooling– Purchasing
• Global Experiences• Key Health Financing Decision Parameters
SAR growth performance has been strong. Recent performance continues
to be close to East Asian growth…GDP growth (annual %)
Source: World Development Indicators, World Bank, 2010
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
1980 1985 1990 1995 2000 2005 2007
East Asia & Pacific Europe & Central Asia Latin America & Caribbean
Middle East & North Africa South Asia Sub-Saharan Africa
Labor Demand
All Countries have experienced Real GDP Growth but Somewhat Tempered by High Population Growth
2510
025
010
0050
0025
000
GD
P p
er c
apita
, con
stan
t 200
0 U
S$
1955 1965 1975 1985 1995 2005Year
Afghanistan Bangladesh Bhutan
India Sri Lanka Maldives
Nepal Pakistan
Source: WDINote: y-scale logged
Real GDP per capita, 1960-2008
But growth has not been inclusive enough to reduce the number of poor
Poverty rates have declined, but not fast enough to reduce the number of the poor…
South
Asia
East
Asia
Sub-
Sahara
n Africa
200
400
600
800
1000
1981 1993 2005
No. of poor people in millions
Source: World Development Indicators, World Bank 2009.
Thus poverty, despite decline, remains a significant problem
Source: WB SA Strategy Update
Large part of the work remains in the agricultural sector
0
10
20
30
40
50
60
70
80
90
100
90s 00s 90s 00s 90s 00s 90s 00s 90s 00s 90s 00s 90s 00s
Nepal India Bangladesh Bhutan Pakistan Sri Lanka Maldives
Distribution of Workforce by Sector
Agriculture Industry Services
Source: WDI and GDF databases; Bosworth, Maertens, 2008
And therefore SA is Largely Rural(Percent of Population Living in Rural Areas, 2008)
0
10
20
30
40
50
60
70
80
90
Source: WDI
Labor Market Informality
Country % of Total Employmentthat is Informal
Afghanistan N/A
Bangladesh 79%
Bhutan N/A
India 92%
Maldives N/A
Nepal 80%
Pakistan 70% *
Sri Lanka 66%
Source: Marty Chen and Donna Doane. “Informality in South Asia: A Review.” 2008.
* World Bank. http://go.worldbank.org/MYR3I96L80
There is increasing evidence of important migration flows both within and across countries
Source: UNDP Human Development Report, 2009; IBRD 37115, October 2009. NSS 55th round from “South Asia’s Poorest Half Billion” (Ghani, 2009).
0.0
2.0
4.0
6.0
8.0
10.0
12.0
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
Emig
rati
on
Rat
e,
20
00
-20
02
Immigrants as % of Population, 2005
Afghanistan
Bangladesh
SSA BhutanIndia
Maldives
Arab States
Central & Eastern Europe & CIS
LACSri Lanka
Nepal
India
PakistanSAREAP
International movements in South Asia are low by regional standards, but is significant for particular countries.
In big countries, internal mobility between lagging and leading regions is also important.
South Asia has the highest incidence of conflict in the world
Global conflict & unrest Terrorist Incidents and Fatalities per Million Population
in Leading and Lagging Regions 1998-2007
0.00
0.50
1.00
1.50
2.00
2.50
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Incidents (leading) Incidents (lagging)
Fatalities (leading) Fatalities (lagging)
South Asia, MIPT
Source: Economist Intelligence Unit. Note: A lower score indicates a more peaceful country. Number of incidents per million population is on the left vertical axis,
and the number of fatalities per million population is on the right vertical axis.Source: MIPT data was collected by the National Memorial Institute for the
Prevention of Terrorism (MIPT), in collaboration with the National Counter Terrorism Center (NCTC).
1 1.5 2 2.5
EAP
ECA
LAC
MENA
Africa
SAR
Index 1 to 5.
Between 2004-07, five of eight SAR countries were in the top ten contributors to direct conflict deaths worldwide. Three of the eight are in the top ten in terms of death rates from direct conflict.
SA Economic and Demographic Snapshot
Economic Indicators Health Outcomes
Per Capita
GDP (current
US$), 2008
Average GDP
growth per
capita, 2008
Under-five
mortality rate
(deaths per
1000 births),
2008
Life expectancy at
birth, 2008
Annual
population
growth rate (%),
2008
Infant Mortality,
2008
Afghanistan 366 -0.4 257 44 2.7 165
Bangladesh 497 4.7 54 66 1.4 43
Bhutan 1869 12 81 66 1.6 54
India 1017 4.7 69 64 1.3 52
Maldives 4135 3.7 28 72 1.4 24
Nepal 438 3.4 51 67 1.8 41
Pakistan 991 -0.16 89 67 2.1 72
Sri Lanka 2013 5.2 15 74 0.73 13
South Asia 951 4.1 76 64 1.5 58
Source: WHO & WDI
A rapidly growing labor force increases the pressure to create more jobs
Source: U.S. Census Bureau Population Projections, 2010.
-100 -80 -60 -40 -20 0 20 40 60 80 100
0-4
7-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90-94
100+
Population (Million)
Age
Gro
up
(ye
ars)
The Changing Population Pyramid in South Asia2000-2025-2050
Male Female200020252050
Changing BOD will Pose a Serious SA Challenge
40.3
13.2
46.5
Comunicable diseases Injuries
Non-Communicable dieases
2008
19.1
14.5
66.4
2030
Source: WHONote: Disease burden measured as % of standard DALYs(3% discounting, age weights) - baseline scenario
Burden of Disease in South Asia, Projected 2008 & 2030
Source: World Bank
0%
10%
20%
30%
40%
50%
60%
70%
80%
SA
R
Afg
ha
nis
tan
Ba
ng
lad
esh
Bh
uta
n
Ind
ia
Ma
ldiv
es
Ne
pa
l
Pa
kist
an
Sri
La
nka
Change in total pop. + aging factor Change in total pop.
Aging Will Affect Total Health Expenditures in SA Countries(increase in health spending between 2020 and 2000 due only to changing population composition)
Creating Fiscal Space…Domestic resource mobilization, public expenditure restructuring including subsidies,
and efficiency and effectiveness of government expenditures will be key...
FISCAL DEFICITS
Source: Global Economic Prospects and Selected country authorities
-10
-8
-6
-4
-2
0
2
4
1996-2000 2001-2005 2005-2008 2009-2011
Post Crisis
Projection
In percent of GDP
SAR EAP LAC ECA
22
SAs Health Financing Baseline
Health Financing Reforms are One Important Aspect of the Broader Health System Reform Agenda
Efficiency
Source: Modified from World Bank, WHO 2008
Health System Functions and Goals
Purchasing
Benefits
Health system
goals
Equity in finance
(Intermediate) objectives
of health finance policy
Revenue
collection
Health system functions
Pooling
Financial
protection
Health gain
Equity in utilization
and resource
distribution
Quality
Service delivery
Equity in health
ResponsivenessTransparency and
accountability
Efficiency
Health financing
system
Ste
wa
rds
hip
Resource
generation
Source: Kutzin et al., Implementing Health Financing Reform: Lessons from Countries in Transition, WHO, forthcoming.
SA Health Financing BaselineHealth Expenditures, 2008 (country weighted)
Country or IncomeClass GDP per capita,
current US$
Health expenditures per
capita, current US$
Total health spending (%
GDP)
Public health spending (% Total health spending)
Out-of-pocket health spending
(% Health spending)
Total revenue (% GDP)
Social security health spending (%
public health spending)
External health resources (%
health spending)
Afghanistan 366 48 7.3 21 78 7.6 0 17
Bangladesh 497 17 3.5 36 63 11 0 5.5
Bhutan 1869 75 3.9 80 20 24 0 30
India 1017 43 4 28 64 15 16 1.7
Maldives 4135 462 11 70 22 44 3.9 1.2
Nepal 438 20 4.9 39 55 12 0 20
Pakistan 991 24 2.9 30 58 13 4.4 4.1
Sri Lanka 2013 81 4 43 49 14 0.14 0.75
Low-income countries 585 33 5.8 42 46 15 5.3 25
Lower middle-income countries 2459 142 6.1 57 37 28 16 10
Upper middle-income countries 7777 503 6.5 61 29 30 32 2
High-income countries 38191 3386 8 72 21 34 37 0.088
Source: WDI & WHO
Health Spending has not Increased Much Since 1995 in a Number of Countries
Public Health to GDP Ratio Total Health to GDP Ratio
Maldives
Afghanistan
Bhutan
Nepal
India
Sri Lanka
Pakistan
Bangladesh
2
4
6
8
10
To
tal he
alth s
pe
nd
ing a
s s
ha
re o
f G
DP
(%
)
1994 1996 1998 2000 2002 2004 2006 2008Year
Source: WDI, WHONote: y-axis log scale
Total Health Spending Share of GDP (%) in Selected Comparators (1995-2008)
Maldives
Bhutan
Afghanistan
Sri Lanka
Nepal
India
Bangladesh
Pakistan
.25
.75
1.25
1.75
2.25
3.25
4.25
5.256.257.25
Pu
blic
he
alth s
pe
nd
ing a
s s
ha
re o
f G
DP
(%
)
1994 1996 1998 2000 2002 2004 2006 2008Year
Source: WDI, WHONote: y-axis log scale
Public Health Spending Share of GDP (%) in Selected Comparators (1995-2008)
Total Spending in Most SA Countries is Below Income Comparators
Share of GDP
Pakistan
Bangladesh
Nepal
Bhutan
IndiaSri Lanka
Afghanistan
Maldives
0
5
10
15
20
To
tal he
alth s
pe
nd
ing (
% o
f G
DP
)
100 250 1000 2500 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Total Health Expenditure as Share of GDP versus Income Per Capita (2008)
Per Capita
Pakistan
Bangladesh
AfghanistanBhutan
Nepal
India
Maldives
Sri Lanka
5
2030
50
100
250
1000
5000
To
tal he
alth s
pe
nd
ing p
er
cap
ita
(cu
rren
t U
S$)
100 250 1000 2500 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: Both axis log scale
Total Health Expenditure per Capita versus Income per Capita in Current US$ (2008)
As is the Case for Government Health Spending
Share of GDP
PakistanBangladeshAfghanistan
NepalBhutan
Maldives
Sri LankaIndia
5
10
15
Pu
blic
he
alth s
pe
nd
ing (
% o
f G
DP
)
100 250 1000 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Public Health Expenditure as Share of GDP versus Income per Capita (2008)
Per Capita
Bhutan
India
NepalPakistan
Sri Lanka
Afghanistan
Bangladesh
Maldives
5
50
100
250
1000
5000
Pu
blic
he
alth s
pe
nd
ing p
er
cap
ita
(cu
rren
t U
S$)
100 250 1000 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: Both axis log scale
Public Health Expenditure per Capita versus Income per Capita in Current US$ (2008)
Government Health Spending is also Low as a Share of the Total and the Government Budget
Share of Total Share of Budget
BhutanNepal
Maldives
Sri Lanka
PakistanAfghanistan
IndiaBangladesh
0
10
20
30
Pu
blic
he
alth s
pe
nd
ing
(% tota
l g
overn
me
nt b
ud
ge
t)
100 250 1000 5000 25000GDP per capita (current US$)
Sources: WDI; WHONOTE: x-axis log scale
Public Health Expenditure as Share of Total Government Expenditureversus Income per Capita (2008)
Pakistan
Bangladesh
Bhutan
Nepal
Afghanistan
India
Maldives
Sri Lanka
0
20
40
60
80
100
Pu
blic
he
alth s
pe
nd
ing
(% tota
l h
ea
lth
sp
en
din
g)
100 250 1000 2500 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Public Health Expenditure as Share of Total Health Expenditure versus Income per Capita (2008)
Private Spending is High
Share of Total Per Capita
Bhutan
Maldives
Pakistan
Bangladesh
India
Sri LankaNepal
Afghanistan
0
20
40
60
80
Pri
va
te h
ea
lth
sp
en
din
g(%
tota
l h
ea
lth
sp
en
din
g)
100 250 1000 4000 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Private Spending as Share of Total Health Spending versus Income per Capita (2008)
Maldives
Bangladesh
Bhutan
Sri LankaAfghanistan
Nepal Pakistan
India
5
50
100
250
1000
5000
Pri
va
te h
ea
lth
sp
en
din
g p
er
ca
pita (
curr
ent U
S$
)
100 250 1000 5000 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: Both axis log scale
Private Health Expenditure per Capita versus Income per Capita in Current US$ (2008)
As is Out-of-Pocket Spending
Share of Total Per Capita
Afghanistan
India
Pakistan
Bhutan
Nepal Sri Lanka
Bangladesh
Maldives
0
20
40
60
80
Out-
of-
po
cket h
ea
lth
sp
en
din
g
(% tota
l h
ea
lth
sp
en
din
g)
100 250 1000 5000 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: x-axis log scale
Out-of-Pocket Spending as Share of Total Health Spending versus Income per Capita (2008)
AfghanistanIndia
Sri LankaMaldives
NepalBhutan
Bangladesh
Pakistan
5
50
100
250
1000
5000
Out-
of-
po
cket h
ea
lth
sp
en
din
g p
er
ca
pita
(curr
ent U
S$
)
100 250 1000 3500 10000 25000GDP per capita (current US$)
Sources: WDI; WHONote: Both axis log scale
Out-of-Pocket Health Expenditure per Capita versus Income per CapitaCurrent US$ (2008)
Higher Public Spending Means Lower OOP
Pakistan
AfghanistanNepal
Bhutan
India
BangladeshSri Lanka Maldives
10
30
70100
Out
-of-
pock
et e
xpen
ditu
res
on
hea
lth
(% o
f to
tal h
eal
th e
xpen
ditu
res)
.5 1 3 5 7 9 13Public health spending (% of GDP)
Sources: WDI; WHONote: both axes log scale
Out-of-pocket Health Expenditures as Shareof Total versus Public Health Expenditures (% GDP), 2008
The Numbers of Doctors and Hospital Beds have also Increased Over Time
Doctors Beds
Maldives
Nepal
Bhutan
Afghanistan
Bangladesh
Sri LankaIndia
Pakistan
.02
.05
.5
.1
1
1.5
2
Ph
ysic
ians p
er
1,0
00
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010Year
Source: WDI, WHONote: y-axis log scale
Physician to Population Ratio in Selected Comparators (1960-Most Recent Available Year)
Sri Lanka
Nepal
Maldives
Bhutan
India
Pakistan
AfghanistanBangladesh
0
1
2
3
4
Ho
sp
ita
l b
ed
s p
er
1,0
00
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010Year
Source: WDI
Hospital beds to Population Ratio in Selected Comparators (1960-Most Recent Available Year)
Expenditure Performance also Depends on Health Sector Inputs
Physicians
Maldives
Sri LankaIndia
Nepal
Pakistan
Bangladesh
Bhutan
.1.2
5
15
15
Phy
sici
ans
per 1
000
250 1000 5000 25000GDP per capita, US$
Source: World Development Indicators, WHO, Royal Monetary Authority, & RGOB Annual HealthBulletin, 2009Note: log scaleData are for latest available year
Doctor Supply versus Income, 2000 - 2008
Including Hospital Beds
India
Maldives
Nepal
Pakistan
Sri Lanka
Bhutan
Afghanistan Bangladesh
.1.2
5
15
15
Hos
pita
l bed
s pe
r 10
00
250 1000 5000 25000GDP per capita, US$
Source: World Development Indicators, WHO, Royal Monetary Authority, & RGOB Annual HealthBulletin, 2009Note: log scaleData are for latest available year
Hospital Bed Supply versus Income, 2000 - 2008
IMR and LE have Improved Over Time
Infant Mortality Life Expectancy
5
25
100
250
Infa
nt m
ort
alit
y (
pe
r 1,0
00
liv
e b
irth
s)
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010Year
Afghanistan Bangladesh Bhutan
India Sri Lanka Maldives
Nepal Pakistan
Source: WDINote: y-axis log scale
Infant Mortality Rates in Selected Comparators (1960-2008)
Afghanistan
BhutanNepal
Bangladesh
India
Maldives
Pakistan
Sri Lanka
30
40
50
60
70
80
Life
expe
cta
ncy (
yea
rs)
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010Year
Source: WDI, WHONote: y-axis log scale
Life Expectancy in Selected Comparators (1960-2008)
But Performance on Specific Health Outcomes is More Mixed in Terms of Efficiency
Skilled Birth Attendents
Afghanistan
Maldives
Nepal
Sri Lanka
Bhutan
Bangladesh
India
Pakistan
Wor
se th
an a
vera
geBe
tter t
han
aver
age
Better than averageWorse than average
Perfo
rman
ce re
lativ
e to
hea
lth s
pend
ing
per c
apita
Performance relative to income per capita
Source: World Development Indicators (2010), WHO (2010), & Royal Monetary Authority (2009)Note: both axes log scaleData are latest available year 2003-2008
Skilled Birth Attendance Relative to Income and Spending, 2003-2008
And Also Outcomes
Infant Mortality Maternal Mortality
Bangladesh
Pakistan
Bhutan
Afghanistan
India
Maldives
Nepal
Sri Lanka
Be
tter
than
avera
ge
Wors
e tha
n a
ve
rag
e
Worse than averageBetter than average
Pe
rfo
rman
ce r
ela
tive
to h
ealth
sp
en
din
g
Performance relative to income
Global Comparisons of Infant Mortalityversus Income and Total Health Spending, 2008
BangladeshPakistan
Sri Lanka
India
NepalBhutan
Afghanistan
Maldives
Be
tter
than
avera
ge
Wo
rse
tha
n a
ve
rag
e
Worse than averageBetter than average
Pe
rform
an
ce
rela
tive
to h
ea
lth
sp
en
din
g p
er
ca
pita
Performance relative to income per capita
Source: World Development Indicators, WHO, & Royal Monetary Authority, 2009Note: both axes log scale
Global Comparisons of Maternal Mortality Relative to Income and Spending, 2005
So money is not a sufficient condition for improved outcomes. The challenge is:
• Achieve universal coverage• Improve financial protection • Increase health system efficiency
In the context of:
• High out-of-pocket payments• Large number of poor and large informal sector• Fragmented financing systems• Limited revenue-raising capacity• Inefficient purchasing arrangements• Unpredictable/Insignificant donor aid• Decentralized environments & variable local
management capacitySource: Gottret and Schieber 2006