Health Sector PERs: Ukraine Case Study. Fiscal, Efficiency, and Equity Issues in the Health Sector. Adam Leive Human Development Network. Outline. Objectives of PER Health outcomes and demographics Description of health financing and delivery system
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Fiscal, Efficiency, and Equity Issues in the Health Sector
Human Development Network
Source: World Bank staff calculations
where Ti is the transfer to local government i; Viare the estimated expenditure needs for local government i and Di its estimated revenue capacity
Examples of Norms for the functioning of health facilities
1 Infection disease doctor per 25 beds in outpatient aid in Rayon hospitals;
1 Surgeon per 20 beds (adults) and 15 beds (children) in Rayon hospitals
1 Nurse (gynecology) per 25 beds in Rayon hospitals;
1 Nurse per 20 beds in Children’s hospitals
1 Dietarian nurse per 500 portions served a day
1 Obstetrician-gynecologist per 20 beds in Rayon hospitals; 1 post per 15 beds in
0.5 Statisticians per 20 posts of doctors in polyclinics
1 Cook per 30 beds in a health facility
1 Cleaner per 500 square meters (0.5 per each 250 square meters)
Source: Extracted from Order No. 33 Ministry of Health
Ministry of Finance
Ministry of Health
Budget Allocation Through:
(1) Shared Revenues (PIT, Land)
(2) Equalization Transfer (population- based for health)
(3) Local Taxes
Input Norms to form health facility budgets, which constrain budget flexibility (Order No 33)
Local Budget Submission complying with Norms
Budget Formation: Prepare budgets fulfilling the “norms”, which lead to extremely high current spending
“Norms” fulfillment + Large network of facilities = non-flexible local budgetscrowded by high recurrent spending little spending autonomy is left to local governments.
Source: Authors’ calculations from World Bank Health and Education Survey 2004
Variable Coefficient Z-statistic
Eastern 0.252 (1.94)
Donetsk 0.241 (1.79)
Prechornomorsk 0.291 (2.36)*
Podilia 0.109 (0.87)
Central 0.074 (0.55)
Predniprovsk 0.235 (1.71)
Carpathian 0.014 (0.11)
1,688 Observations * = significant at 5%
Other control variables: age, sex, body mass index, marital status, income, education level, inpatient facility type, and geographical location of facility
* significant at 5%; ** significant at 1%
Ramsey’s RESET Test: p-value = 0.09
Reference individual is female, under 19, lives in a rural area of the Polisya economic region, married, lowest income quintile, has secondary education, and was hospitalized in a village hospital.
Catastrophic out-of-pocket (OOP) spending is defined for a household h if OOP spending exceeds 40% of the household’s capacity to pay. The definition of capacity to pay is constructed in the following way and closely follows Xu, K. (2005). "Distribution of health payments and catastrophic expenditures: Methodology." World Health Organization Health Systems Financing Discussion Paper, Number 2.
First, the food expenditure share of total household expenditure is constructed by dividing the household's food expenditure by its total expenditure.
The household equivalence scale is used instead of the actual household size to account for economies of scale in household consumption. The equivalence scale is defined as:
Previous research from household surveys in 59 countries indicates that the B = 0.56 (Xu et al. 2003). The equivalised food expenditure share is generated by dividing food expenditure by the equivalent household size.
The poverty line is defined as the food expenditure of the household with food expenditure share of total household expenditure at the 50th percentile in the country. Average food expenditure of the households with food expenditure shares between the 45th and 55th percentiles of the total sample are used to minimize measurement error. The percentiles consider the household weighting variable of the survey.
The subsistence expenditure of each household is then calculated as the poverty line multiplied by the equivalent household size of each household.
SEh = PLXEQSIZEh
Capacity to pay is defined as a household's non-subsistence spending. Additionally, for those households reporting food expenditure lower than the level of subsistence spending, non-food expenditure is used as capacity to pay.
CTPh = TEXPh - SEh if SEh ≤ FOODh
CTPh = TEXPh - FOODh if SEh > FOODh
GXis the Gini coefficient before payment, GX-P is the Gini coefficient after payment,GF(x) is the Gini coefficient for post-payment income for households with pre-payment income x, αx are weights equal to the product of the population share squared and the post-tax income share of households with income x, GB is the Gini coefficient of the income distribution after payment that would exist if all members of each equal pre-payment income group paid the same amount, and CX-P is the concentration index after payment that is obtained by ranking households first by their income before payment and then within each group of pre-payment equals according to their income after payment
References: Aronson, J.R. and P. Lambert. (1994). “Decomposing the Gini Coefficient to Reveal the Vertical, Horizontal, and Reranking Effects of Income Taxation.” National Tax Journal. 47(2): 273-94.
van Doorslaer, E. et al. (1999). “The redistributive effect of health care finance in twelve OECD countries.” Journal of
Health Economics, 18: 291-313.