Organizational Barriers and Equity: Lessons from Decentralization in LAC

1. Organizational Barriers and Equity:Lessons from Decentralization in LAC Daniel Maceira, Ph.D. danielmaceira@cedes.org Center for the Studies of State and Society Buenos Aires, Argentina

2. LAC Context During the ’80s and ’90s • Highly Volatile Economies, • Profound Gaps in Income Distribution, • Implementation of Macroeconomic Adjustment Policies with Negative Effects on Social Sectors (Education and Health), • Social Sectors have been subject to a Series of Reforms. Goals: Achieve Social Objectives s.t. Financial Restrictions (WDR93).

3. Two Dimensions of Health Care Systems in LAC

4. Political Economy of Health Care Reforms Political Level Executive Power • Ministry of Health • Ministry of Finance Congress Local Governments Multilateral Organizations International Donors Social Security Institutions Private Health Care Plans Health Providers´ Chambers Physicians´ Prof. Organizations Health Care Workers Drugs & Input Producers Patients Consumers´ Associations Goals Strategies Actions Beliefs International Level Sectoral Level

5. Framework: Organizational Barriers • Reforms trigger Changes in the Structure of the Sector. • Policy Markers should select clear Goals to contrast them against others´Action Plans, identifying potential Partners & designing Mechanisms to align Interests. • Decentralization requires: • Willingness to Distribute Political & Financial Power. • Strong Investments in Management and Social Control at the Local Level. • Any reform should forsee a complete Action Plan considering: • Spillovers over other sub-sectors (private, social insurance) • Cross subsidies to avoid increasing equity gaps. • History Matters (federalisms, socialisms, authoritarisms).

6. Financial Reforms in LAC

7. Bolivia • Structural Reform + Health Care Strategy (Maternal&Child Insurance) • Law of Municipalities (´85)/ Popular Participation Law (´94): • Coparticipation Funds: New rules of Distribution, based on Population at Departament Level. • Popular Election of Municipal Authorities. • Decentralization of Resources (Broken production function). • Social Control (Popular M&E Commitees). • Actors: • “Neoliberal” reforms (Sanchez de Lozada) • New economic and political Stakeholders, • Municipalities vs. Departments (Santa Cruz – Tarija), • Declining Union´s Political Power (post 1985) • Strong influence of Intl. Donors and Multilateral Organizations. • Results: • HC Coverage Increased, • Strong non-planned Subsidies, • Empowerment of Local Leaders, • Weak effects on equity gap in resource allocation.

8. 100% 90% 80% 70% 60% %Population %Co-participation, cumulated 50% %Own Resources, cumulated %Foreign Aid, cumulated 40% 30% 20% 10% 0% 1st 2nd 3rd 4th 5th Distribution of Resources, by quintile of UBN and by Source

9. Econometric estimation I: TFR 2001 (with and without constant) and IMR 2001

10. Decentralization in Bolivia: Some Conclusions • Administrative/Managerial expertise of major political parties are significant “Quality Shifters” in some Public Policy Outcomes. • Urbanity proves to be a relevant issue when planning Health Care Strategies. • Financial Resources, as proxy of Decentralization Commitment have a significant, positive and similar effect on Social Outcomes. • Local Managerial Capacity has significant and similar effect on Health and Education Outcomes. • Community-type variables do not show influence on Social Sectors´Results.

11. Argentina • Federalism + Decentralization (late ´80s). • Provintial Authorities kept ownership & control of Health Care Resources (human, fiscal, & infrastructure), defining own Public Health Strategies. • COFESA: Federal Health Council – Deliverative Body with no enforcement power. • 60% of Population covered by Transversal Social Health Insurance Plans. • Main Social Security Institution: PAMI (Public insurance for edlery), • Unions and Provintial Public Bureaucracies control circa 50% of formal health coverage, divided into 300 social funds: • Fragmentation of resources – weak risk pooling mechanisms. • Limited solidarity among funds. • Provision of care is mainly contracted to Private Providers (no VI financing-provision of care). • Therefore: • Limited capacity of National Ministry of Health to align interests, • Results: • Increasing financial gaps in HC among provinces, • Inefficiency in Resource Allocation, • Crisis 2002: Alignment of National and Provintial Goals helped to support partial reforms (Remediar, Law of Generics) .

12. Out-of-pocket in Health Care, by Component (in %), By Household Income Quintiles (Indec-EGH98) Health Care Expenditures % 15 7.5 Total Health Care Services + Private Insurance Pharmaceuticals Q1 Q2 Q3 Q4 Q5 0 1794 190 3204 Household Income

13. Provincial Expenditures in Health per Capita, 2003

14. Health System Indicators: Supply and Needs

15. Health Care Expenditures, by Source

18. General Policy Implementation Issues • Scarce Empirical Literature on Decentralization in LAC. • Lack of M&E Mechanisms affects Documentation of Results. • Limited Institutional Capacity at Public Level provokes Organizational Constraints in Policy Implementation. • National Governments do not coordinate Health Care Strategies with Governors and Municipal Authorities. • Rules/Reforms´Main Actions are defined by Actors with strong bargaining power, implying: • Financial and Epidemiological Risk Transfers, • Poor Equity Indicators, leading to inefficient allocation of resources, • High Transaction (administrative, bargaining) Costs, • Poorly Effective Reforms, • Lack of Sustainable M&E Tools to improve feedback and Sound Advocacy Agenda.

19. Income, Expenditures and HC Needs