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Mobilizing the private sector for HIV and social health protection Joep M.A. Lange (acknowledging Onno Schellekens and Marianne Lindner) PharmAccess Foundation Amsterdam Institute for Global Health & Development. How I (a physician) feel talking about financing (in 12+ slides).

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Mobilizing the private sector

for HIVand social health protection

Joep M.A. Lange

(acknowledging Onno Schellekens and Marianne Lindner)

PharmAccess Foundation

Amsterdam Institute for Global Health & Development


How i a physician feel talking about financing in 12 slides
How I (a physician) feel talking about financing (in 12+ slides)


Health systems in Africa

Africa spends very little on health care

Health care in Africa is underfunded

Population

X mio

Burden of communicable diseases

DALYS

Total health expenditure

x $ mio

Africa

Rest of the world

Source, WHO 2008


Health expenditure per capita in sub saharan africa is far from sufficient

Tanzania

Health expenditure per capita in sub-Saharan Africa is far from sufficient

24.Sudan

25. Cote d’Ivoire

26.Rwanda

27.Uganda

28.Angola

29.Malawi

30.Congo Rep.

31.Gambia

32.Zimbabwe

33.Zambia

34.Senegal

35.Lesotho

36.Cameroon

37.Sao T & Pr.

38.Cape Verde

39.Swaziland

40.Equatorial Guinea

41.Namibia

42.Gabon

43.Mauritius

44.Botswana

45.South Africa

46.Seychelles

1.Congo Dem. Rep.

2.Burundi

3.Niger

4.Ethiopia

5.Sierra Leone

6.Eritrea

7.Liberia

8.Guinea Bissau

9.Comoros

10.Madagascar

11.Central Afr Rep.

12.Tanzania

13.Mozambique

14.Chad

15.Togo

16.Guinea

17.Mali

18.Mauritania

19.Burkina Faso

20.Ghana

21.Benin

22.Nigeria

23.Kenya


The aids response did create islands of sufficiency in a swamp of insufficiency gorik ooms msf
The AIDS response did create islands of sufficiency in a swamp of insufficiency (Gorik Ooms, MSF)


Health systems in africa
Health systems in Africa swamp of insufficiency (Gorik Ooms, MSF)

Donor funding goes mostly to the public sector

The private (for-profit) health sector is underfunded

Other

Private sector

Public sector

Source: National Health Accounts 1997-2002 (latest year available); McKinsey analysis


Public financing of health in developing countries lu c et al lancet 2010 375 1375 87
Public financing of health swamp of insufficiency (Gorik Ooms, MSF)in developing countriesLu C, et al. Lancet 2010;375:1375-87

  • Development assistance for health (DHA) to government had a negative and significant effect on domestic government spending on health (minus $ 0-43 to 1.14 for every $ of DAH).

  • DAH to the non-governmental sector had a positive and significant effect on domestic health spending.


Health systems in africa1
Health systems in Africa swamp of insufficiency (Gorik Ooms, MSF)

Public services benefit the rich more than the poor

The poor are often not reached

Percentage of lowest and highest quintile using public health services

Source: Preker AS, Langenbrunner JC et al (2005)


Health systems in Africa swamp of insufficiency (Gorik Ooms, MSF)

The private-for-profit health sector is an important provider for the poor

> 40% of lowest income quintile receive health care from private providers

Percentage of lowest and highest quintile receiving care from private providers

Source: The business of health in Africa, IFC 2008


Health systems in africa2
Health systems in Africa swamp of insufficiency (Gorik Ooms, MSF)

Risk pooling is very scarce

Africans lack protection against medical costs; solidarity is limited

Social security and private prepaid health care spending

Only 4% of total health expenditure in Africa is financed through health insurance

Source: WHO 2008


Health systems in africa3
Health systems in Africa swamp of insufficiency (Gorik Ooms, MSF)

Private out-of-pocket expenses are ~50% of total health expenditure

Many fall in a poverty trap; increased inequity

Source: WHO 2008


The second law of health economics
The second law of health economics swamp of insufficiency (Gorik Ooms, MSF)

Rich countries have a lower share of out-of-pocket expenses than poor countries


Health systems in africa4

Demand swamp of insufficiency (Gorik Ooms, MSF)

Medical care usage

Supply

Quality health care

low

low

low

low

Delivery

Health systems in Africa

African health systems are stuck in a vicious circle:

low demand and low supply of health care

Access to quality basic health care among the poor is low

Financing


The need for an alternative approach
The need for an alternative approach swamp of insufficiency (Gorik Ooms, MSF)

  • There are good reasons to involve government in health care:

    • Efficiency concerns: market failures, externalities

    • Equity concerns/ social justice: health (care) as a human right

  • However, preconditions for state-led model to work are not met in Africa:

    • Reasonable level GDP/capita: sufficient domestic government resources

    • State capacity to enforce means-tested contributions for health care and actually deliver services nation-wide

  • Innovative approaches to healthcare development are needed


The role of donor funding swamp of insufficiency (Gorik Ooms, MSF)

  • How to use donor money in such a way that:

    • the total amount of financial resources in the health system increases, and

    • access to quality basic health care among low-income people is increased?


The role of donor funding swamp of insufficiency (Gorik Ooms, MSF)

  • Strategies that avoid crowding out effects and reduce out-of-pocket expenses

  • Set up voluntary risk pooling and prepayment for low-income groups

    • Channel private out-of-pocket payments into risk pools

    • Those who can pay do pay

  • In tandem with boosting supply chain

    • No supply, no prepayment

    • Telecom industry: low-income people do prepay when the service is good


  • Alternative model a virtuous circle of health care

    HIF swamp of insufficiency (Gorik Ooms, MSF)

    Dutch gov

    100 mln

    User premium contributions

    2-3 mln

    IFHA

    50 mln

    MCF

    2 mln

    Alternative model: a virtuous circle of health care

    World Bank

    5 mln

    USAID

    20 mln

    • Demand

    • Out-of-pocket

    • Access to health care

    • Ownership

    • Solidarity

    • Supply

    • Quality

    • Efficiency/ cost

    • Risk/ investment

    • Data

    Financing

    Delivery

    • Patient

    • Empowerment

    • Willingness to pay


    Example hygea nigeria
    Example Hygea (Nigeria) swamp of insufficiency (Gorik Ooms, MSF)

    Supply side: Reduced risk and increased investment

    • Reduced investment risk due to collateral arrangement consisting of long-term donor commitment through HIF.

    • This made it possible for insurer to attract new debt and private equity investments:

      • Debt capital:

        • Reduction cost of debt capital by two-thirds

        • FMO/IFC inserted significant new debt capital

      • Private equity:

        • IFHA significant minority share in insurer

        • Few years later significant capital from venture capital fund Mo Ibrahim

    • Total amount of money in the value chain increased 10 times


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