Increasing Investments inIncreasing Investments inHealth Outcomes for the PoorHealth Outcomes for the Poor

George SchieberHealth and Social Protection Sector Manager

Middle East and North Africa RegionThe World BankOctober 2003

Overview of PresentationOverview of Presentation• Why invest in health?• How much are we currently investing?• Are we getting value for money – maximizing

outcomes per dollar spent (e.g., the ‘right’interventions, the ‘right’ people, and producingresults in a technically efficient manner)?

• How much ‘should’ be spent for a minimal packageof basic health services? What outcomes andimplementation constraints should be targeted?What is the gap?

• How much can countries afford?• Where do countries and donors go from here?

Why Invest in Health?Why Invest in Health?

• 10% increase in life expectancy at birth leads to0.35% increase in the economic growth rate(CMH).

• Increases in health status accounted for 17% of theincrease in productivity gains (NBER).

• Effectiveness of spending in improving healthoutcomes also depends on the policy andinstitutional environment with poor policy andinstitutional environments resulting in little gain,and conversely (WB, forthcoming).

Growth Is Not EnoughGrowth Is Not Enough

15159561003524Africa

6943991001522South Asia

41259610011Middle Eastand NorthAfrica

30179510088LatinAmerica

261510010011Europe andCentral Asia

2619100100414East Asia

2015 growthalone

Target2015 growthalone

Target2015 growthalone

Target

Under-5 mortality ratePrimary completion rate (%)Percent living on$1/day

Sources:WDR 2004, Devarajan 2002. Notes: Average annual growth rates of GDP per capita assumed are: EAP 5.4; ECA 3.6; LAC 1.8; MENA 1.4; SA 3.8; AFR 1.2. Elasticity assumed between growth and poverty is –1.5; primary completion is 0.62; under-5 mortality is –0.48.

Economic Growth Is Not Always Pro-PoorEconomic Growth Is Not Always Pro-PoorNegative Growth Inequality Rises Positive Growth/Inequality Rises

Anti-Poor Recession Yrs g g20 Broadly Shared

Growth Yrs g g20 Not Pro-poor By Any Definition Yrs g g20

Poland 20 -0.2 -1.4 Korea, Rep 32 6.7 6.6 Costa Rica 35 1.6 -0.1 Iran, Islamic Rep 15 -0.4 -0.7 Taiwan, China 31 6.3 6.2 Tanzania 27 1.5 -2.1 Slovak Republic 10 -0.4 -0.5 Hong Kong China 20 5.8 5.2 Bulgaria 10 1.5 -3.5 Niger 32 -0.6 -1.3 Singapore 20 5.4 5.2 Panama 26 1.4 -2.3 Sierra Leone 21 -0.8 -7.7 China 15 5.0 1.6 Nigeria 38 1.2 -0.5 Zambia 37 -1.0 -2.7 Malaysia 25 4.7 4.1 Dominican Republic 20 1.0 -0.2 Estonia 10 -1.7 -6.2 Thailand 36 4.2 3.1 El Salvador 30 0.7 -1.2 Latvia 10 -4.2 -7.4 Mauritius 11 3.7 1.6 Senegal 31 0.2 -0.5 Russian Federation 10 -5.6 -14.3 Brazil 33 2.5 0.3 Etiopía 14 0.2 -1.2 Colombia 31 2.3 2.1 Mexico 38 2.1 0.9 Ecuador 26 1.7 0.3 Philippines 40 1.5 0.5 Chile 24 1.4 1.1 Peru 33 0.4 0.1

Negative Growth/Inequality Falls Positive Growth/Inequality Falls

Pro-Poor Recession Yrs g g20 Pro-Poor Biased Growth Yrs g g20 Yrs g g20

Guyana 37 -0.4 -0.1 Gabon 15 7.7 9.0 Trinidad & Tobago 31 1.8 2.1 Jordan 17 -0.6 1.0 Indonesia 35 3.7 4.4 India 34 1.8 2.2 Belarus 10 -1.8 -1.1 Tunisia 25 3.4 3.6 Bangladesh 32 1.3 1.5 Madagascar 33 -2.1 -1.7 Egypt, Arab Rep 32 2.8 4.5 Nepal 18 1.2 3.9 Ghana 10 2.4 4.3 Jamaica 35 1.1 1.5 Sri Lanka 32 2.3 3.4 Honduras 28 0.5 1.3 Hungary 31 2.2 2.7 Bolivia 22 0.3 1.0 Turkey 26 2.2 2.9 Venezuela, RB 31 0.1 0.1 Pakistan 32 2.2 2.8

Source: L. Cord, J. Lopez, and J. Page,Pro-Poor Growth and Poverty ReductionWorld Bank, August 2003.

Economic Growth and Poverty ReductionEconomic Growth and Poverty ReductionDo we know what works?Do we know what works?

• Poverty reduction can be achieved by economic growth and/or by changing thedistribution of income

• While growth in itself is not a sufficient condition for poverty reduction, it is acritical enabling factor for significant reductions over time

• Most poverty reduction is in those countries that have experienced sustainedperiods of economic growth and those with lower initial levels of inequalityand poverty

• A 1% rate of growth in average household income or consumption drops thepoverty rate from between 0.6% to 3.5%

• Financial development, trade openness and increases in the size of governmentare associated with higher growth but increases in inequality, ceteris paribus

• Recent studies suggest that policy makers should focus on sectors, regions, andfactors of production dominated by the poor; redistributive spending focusedon the HD assets of the poor; and gender inequalities as there is evidence thatimprovements in these areas as well as lower inflation lead to both growth andprogressive redistribution

Source: WB, PREM, Poverty Reduction Group

Poverty Reduction and Growth PolicyPoverty Reduction and Growth Policy

• Macro policies that affect the value of assets (e.g., trade, inflation,exchange rate, etc.) and the overall price level and interest rates

• Policies that affect the efficiency and functioning of markets (labor,land, capital, product) thereby influencing wages, prices, incentivesand transaction costs

• Pro-poor spending to raise the level of productivity and to protect theassets of the poor (education, health, other social and infrastructurespending, safety nets, agriculture investments, SME development, etc.)

• Policies designed to raise growth by affecting the pattern of growth(industrial policy) which could affect the poor through the abovechannels

Source: WB, PREM, Poverty Reduction Group

Global Health Spending, Income, and ODAGlobal Health Spending, Income, and ODA

Source: WDI, 2002Notes: Regional aggregates exclude high-income countries (GNI per capita > $9,206); MENA health expenditures include SaudiArabia and Oman, which are both considered upper middle-income countries according to World Bank specifications.

Region/income groupPopulation,

millions (2002)

Per capita GDP (2002

$US)

Health expenditures

per capita, (2000)

Public health expenditures

(% of total health exp.,

2000)Aid as a % of GNI (2001)

East Asia & Pacific 1,838 980 44 38 0.5Europe & Central Asia 476 2,384 108 73 1Latin America & Caribbean 527 3,176 262 47 0.3Middle East & North Africa 306 2,265 171 62 0.7South Asia 1,401 467 21 20 1Sub-Saharan Africa 688 463 29 43 4.6World 6,201 5,201 482 58 0.2High income 965 26,942 2735 59 N/AMiddle income 2,742 1,870 115 51 0.4Low income 2,495 453 21 25 2.4

Higher Public Spending on Health Does NotHigher Public Spending on Health Does NotNecessarily Mean Better Health OutcomesNecessarily Mean Better Health Outcomes

* Public spending and child mortality rate are shown as the percent deviation from rate predicted by GDP per capitaSource: Spending and GDP from World Development Indicators database. Under-5 mortality from Unicef 2002`, WDR 2004

Interventions Must Address Inequities in OutcomesInterventions Must Address Inequities in Outcomes((Deaths per 1,000 live births)Deaths per 1,000 live births)

Source: Analysis of Demographic and Health Survey data, WDR 2004

S

hare

of

go

vern

men

t h

ealt

hexp

en

dit

ure

(%

)

0

5

10

15

20

25

30

35

Poorest Quintile Richest Quintile

Africa ECA South AsiaGwatkin, 2001

Interventions Must Address Inequities in PublicInterventions Must Address Inequities in PublicSpendingSpending

Observations on Current Spending PatternsObservations on Current Spending Patterns

• There are large global inequities in health spending among countries• There are large variations in health spending among countries at the

same income level• There are large variations in health outcomes among countries even for

the same health spending and income levels• There are large variations within countries in health spending, access,

and outcomes for the poor vs. non-poor• The private share of health spending, which averages 75% for low-

income countries, decreases as countries’ incomes increase• There are clearly large differences in the efficiency of health spending

related to both allocative (‘doing the right things’) and technical(‘doing things right’) efficiency

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

% growth government health spending

% r

educt

ion U

5M

R 1

990-2

015

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%0% 3% 5% 8% 10% 13% 15%

5% economic growth

& 2.5% female education growth

& 2.5% roads growth

& 2.5% water & sanitary growth

& 2.5% growth in all

Investments are Needed Across Investments are Needed Across Many Sectors to Maximize ResultsMany Sectors to Maximize Results

Choosing and Costing Effective InterventionsChoosing and Costing Effective Interventions

• Which interventions to choose?• How to transfer them to many countries?• How to implement them to scale?• How much will they cost?• What kind of supporting environment is

needed?• Can we monitor their impact?

Implementation Bottlenecks Must Be AddressedImplementation Bottlenecks Must Be Addressed

• Human resource constraints• Constraints to physical accessibility• Supply and logistical problems• Technical and organization capacity constraints• MBB (Marginal Budgeting for Bottlenecks), a

resource allocation tool, can be used to estimatethe costs of removing system-wide impediments toservice delivery

Source: A Soucat , W.V. Lerberghe, F. Diop , S. N. Nguyen and R. Knippenberg, Marginal BudgetingFor Bottlenecks: A New Costing Tool and Resource Allocation Practice to Buy Health Results, World Bank, November 2002.

How Much Can Developing Countries Afford?How Much Can Developing Countries Afford?(Central Government Revenues and Tax Revenues as a % of GDP, circa 2001)(Central Government Revenues and Tax Revenues as a % of GDP, circa 2001)

Source: IMF, 2003

Region/income group TotalFrom tax revenues

East Asia & Pacific 15.7 15.5Europe & Central Asia 25.5 22.3Latin America & Caribbean 21.6 17.7Middle East & North Africa 27.0 18.5South Asia 18.0 11.3Sub-Saharan Africa 21.2 16.7

High-income 31.0 26.0Middle-income 25.0 20.0Low-income 17.6 14.1

Note: Regional aggregates include low-income (GNI per capita < $745) and middle-income ($745 > GNI per capita < $9,206) countries

What Does the Future Hold?What Does the Future Hold?(Projected Annual Growth in Real Per Capita GDP by Region(Projected Annual Growth in Real Per Capita GDP by Region 2006-2015) 2006-2015)

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

SSA EAP SA ECA LAC MENA

Source: World Bank, Global Economic Prospects and the Developing Countries, 2003

How Can the Gap Be Filled?How Can the Gap Be Filled?• Improve equity and efficiency of current spending in terms

of focusing on cost-effective interventions targeted to thepoor provided through an efficient health care deliverysystem

• Undertake appropriate investments in other health–relatedsectors

• Improve domestic resource mobilization• Try to re-allocate private spending for optimal public

purposes including appropriate user charges• Obtain increased donor support and debt forgiveness

through the adoption of effective macroeconomic andhealth sector strategies through PRSPs, MTEFs, SWAPS,Global Funds, etc.

What Does This Mean for Countries?What Does This Mean for Countries?• Develop credible strategies and plans to foster economic growth, deal with

implementation bottlenecks, and reach MDGs as part of PRSPs, SWAPs, MTEFs, andpublic expenditure programs

• Improve governance including giving voice to communities, consumers and opennessto NGOs and private sector

• Enhance absorptive capacity through decentralization, efficient targeting mechanisms,and institutional reforms including having a clear fiduciary architecture and openreporting of results

• Improve equity and efficiency of resource mobilization and commit resources• Middle income countries need to make the commitment to develop and implement

effective health reform strategies relying on evidence-based policy, best internationalpractice, and MDG+ goals and indicators

• Develop financing, management, and regulatory mechanisms for equitable andeffective pooling of insurable health risks as a necessary concomitant to MDG andCMH intervention choices.

• Integrating vertical programs into a well functioning health system to maximizehealth-specific and cross-sectoral outcomes and reduce transactions costs

• Monitor and evaluate results

What Will Donors Have to Do?What Will Donors Have to Do?

• Harmonize procedures (procurement, financial mgt,monitoring & reporting) in order to improve impacts andreduce donor and country transactions costs

• Provide increased and predictable long term financing• Finance recurrent costs• Offer consistent policy advice• Submit to common assessment of their own performance

Ottawa: A Shared Global ApproachOttawa: A Shared Global Approach

• Build on existing funding modalities• Use and further improve existing plans and

mechanisms at the country level• Address inequities within countries• Scale up cost-effective interventions• Tackle critical implementation constraints• Apply a multi-sectoral approach• Focus on results• Country orientation, but global action is also

needed

AnnexAnnex

Why Invest in Health?Why Invest in Health?• Intrinsic value of health

– Philosophical view– Cultural view– Constitutional view

• Extrinsic value of health; economic perspective –human capital– A highly desirable state for which consumers are willing to pay– A factor of production

Source: Salehi,CMH

Why Invest in Health?Why Invest in Health?

Buys more health services

Improves life styles

Reduces job-related risks

Buys more education and other human capital-related services

Buys more health services

Improves life styles

Reduces job-related risks

Buys more education and other human capital-related services

Source: Salehi, 2004

HealthIncomeWealthGrowth

Improves political stability, investment climate, and productivity

Reduces medical spending

Reduces fertilityIncreases labor supply and

female labor force participation Increases saving

Increase in the years of healthy life expectancy

Improves political stability, investment climate, and productivity

Reduces medical spending

Reduces fertilityIncreases labor supply and

female labor force participation Increases saving

Increase in the years of healthy life expectancy

Burden of Disease in Developing Countries, 2001

Injuries12%

Noncommundiseases

40%

Communic. diseases

48% DALYs1.25 million (85% total)

There Is a Huge Global There Is a Huge Global MisMis-Match Between Disease-Match Between DiseaseBurden and Health SpendingBurden and Health Spending

Sources: World Bank, WDI, 2002; WHO, WHR 2002

• Low- and middle-incomecountries shoulder 85% ofthe total global burden ofdisease, yet account for only11 % of global healthspending

Global distribution of health expenditures, 2000

High-income countries

89%

Low - and middle-income

countries11%

Total global health ex penditure: $2,390 billion

There Are Large Global Inequities in Health ResourcesThere Are Large Global Inequities in Health Resources

Source: WDR 2004

Higher Public Spending on Health Does NotHigher Public Spending on Health Does NotGuarantee Better Access for the PoorGuarantee Better Access for the Poor

Source: WDR 2004

Total Health Spending Varies Widely By Income Level Total Health Spending Varies Widely By Income Level(Per Capita GDP vs. Health to GDP Ratio)(Per Capita GDP vs. Health to GDP Ratio)

Source: World Bank,WDI, 2002

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Per Capita GDP, US$

Tota

l hea

lth e

xpen

ditu

res

(% o

f GD

P)

100 1,000 10,000 100,000

Botswana

Djibouti

Bangladesh

Portugal

Finland

Croatia

Indonesia

Czech Rep.

India

Qatar

LibyaTrinidad

Public Health Spending Varies Widely By Income Level Public Health Spending Varies Widely By Income Level(Per Capita GDP vs. Public Health to GDP Ratio)(Per Capita GDP vs. Public Health to GDP Ratio)

Source: World Bank,WDI, 2002

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Per capita GDP ($US)

Publ

ic h

ealth

exp

endi

ture

s (%

of G

DP)

Botswana

Djibouti

Bangladesh

Sweden

Croatia

Philippines

Czech Rep.

India

Qatar

Libya Trinidad

100 1,000 10,000 100,000

LithuaniaLesotho

Tanzania

Child Mortality Varies Widely for Given Income LevelsChild Mortality Varies Widely for Given Income Levels((Per capita GDPPer capita GDP vs. vs. Under-5 Mortality Ratio)Under-5 Mortality Ratio)

0

50

100

150

200

250

300

350

10 100 1000 10000 100000

Per capita GDP, US$

Und

er-5

Mor

talit

y R

ate

(per

1,0

00 li

ve b

irths

)

Sierra Leone

Angola

UK

Eritrea

Botswana

Indonesia

Lithuania

Qatar

Source: World Bank,WDI, 2002

0

50

100

150

200

250

300

350

0 1 2 3 4 5 6 7 8 9 10Public health expenditures (%GDP)

Und

er-5

Mor

talit

y R

ate

(per

1,0

00 li

ve b

irths

)

Sierra Leone

Angola

UK

Eritrea

Botswana

Indonesia

Lithuania

Qatar

Child Mortality Varies Widely for Given Public Health Spending LevelsChild Mortality Varies Widely for Given Public Health Spending Levels(Public Health to GDP Ratio vs. Under-5 Mortality Ratio)(Public Health to GDP Ratio vs. Under-5 Mortality Ratio)

Source: World Bank,WDI, 2002

Behavior of Individuals/Households

IncomeEducation

WaterSanitationNutrition

Performance of Health System•Clinical Effectiveness•Accessibility and Equity•Quality and Consumer Satisfaction•Economic Efficiency

Health Status Outcomes•Fertility•Mortality•Morbidity•Nutritional Status

Macro-economic

EnvironmentHealth Care System

Delivery Structure•Facilities (public & private)•Staff (public & private)•Information, Education, &communication

Institutional Capacity•Regulatory & Legal Framework•Expenditure & Finance•Planning & Budgeting Systems•Client & Service Information/Accountability•Incentives

Projects and Policy AdviceGovernance

Achieving Change in HNPAchieving Change in HNP

How Much How Much ‘‘ShouldShould’’ Be Spent for a Basic Be Spent for a BasicPackage of Essential Health ServicesPackage of Essential Health Services

• A few health conditions are responsible for a highproportion of the world’s health deficit

• These conditions largely affect the poor• Cost-effective health interventions to deal with these

conditions exist;• CMH proposes universal coverage for programs of

essential interventions to be funded by public and donorcontributions

• The costs per capita would be on the order of $38 percapita per person/year in 2007, leaving a donor financinggap of some $27 billion.

Extreme Poverty•Halve, between 1990 and 2015,the proportion of people whoseincome is less than $1 a day.

•Halve, between 1990 and 2015,the proportion of people who sufferfrom hunger.

Safe Water & Sanitation•Halve by 2015 the proportion of people withoutsustainable access to safe drinking water.

•By 2020, achieve significant improvement in theproportion of people with access to sanitation.

Child & Maternal Health•Reduce by two thirds, between 1990 and 2015,the under-five mortality rate.

•Reduce by three quarters, between 1990 and2015, the maternal mortality ratio.

Primary & Girls' Education•By 2015, boys and girlseverywhere complete a full courseof primary schooling.

•Eliminate gender disparity inprimary and secondary education,preferably by 2005, and in alllevels of education no later than2015.

Communicable Diseases By 2015, halt and begin to reverse the spread of:

•HIV/AIDS•Malaria &•Other major diseases.

MDG Approach to Investments in HealthMDG Approach to Investments in Health

MDG ApproachMDG Approach

• Highlights cross-sectoral links of health, education,water, sanitation, poverty reduction, and growth

• Focuses on health outcomes• Estimated costs for assisting countries in reaching

the MDGs are on the order of $50 billion per yearwith health estimated to be $15-30 billion overallincluding $8-15 billion in additional developmentassistance

How Much Can Developing Countries Afford?How Much Can Developing Countries Afford?((Central government revenues (% GDP) vs. GDP per capita)Central government revenues (% GDP) vs. GDP per capita)

Source: IMF, 2003

0

10

20

30

40

50

60

10 100 1000 10000 100000GDP per capita ($US)

Cen

tral

gov

n't r

even

ues

(%G

DP) Czech Rep.

Slovak Rep.Namibia

Lesotho

India Thailand Mauritius

Venezuela

But Rapid Gains Are PossibleBut Rapid Gains Are Possible

• Promote economic growth• Application of known and emerging interventions• Changes in national policies, capacity building,

and increased financial support• Strengthen health systems• Initiate complementary actions across sectors

(education, water, energy, transport)• Enhance donor mobilization and harmonization

What is the World Bank Doing?What is the World Bank Doing?

Record for FY98-02:• Average of 22 projects per year, $1.3 billion

in commitments -- 7% of Bank lending• FY03 likely to end at $1.7 billion in new

financing for 32 new operations• Health disbursements doubled, from $560

million in FY98 to $1.2 b this year• >30 country focused health studies a year

Diversifying Analytical and Financial InstrumentsDiversifying Analytical and Financial Instruments

• Stronger health dimensions of poverty analysis andprogrammatic (multi-year) sectoral analyses

• Expanded health involvement in debt relief and publicexpenditure dialogue

• Innovative financing: IDA grants and credit buy-downs,IBRD buy-downs (e.g., China TB), capital market devices

• Where governance is adequate, finance against outputsand other results, not inputs

• Greater use of sector wide approaches