Today’s health financing targets are redundant

3. ANALYSIS AND COMMENTARY
8 Jun 2022
National health financing targets need to be revised and more realistic

As the Seventh Replenishment conference looms closer, attention of the Global Fund and its partners is on the pledges being made in support of it. Yet the biggest contribution, according to the Investment Case, is the $58.6 billion or 45% of the investment requirements to fight HIV/AIDS, TB and malaria (including strengthening health systems and pandemic responses), estimated at $130.2 billion over the three-year period 2024-2026, that is expected from domestic resources (see our article on the Investment Case: Is it enough? Published earlier this year). Is it reasonable to expect national governments to be able to contribute so much in an era of unprecedented financial hardship?

This article explores the different ways in which developed countries try to assess what their poorer neighbours should be contributing to their own health budgets and whether or not, twenty years after the Abuja Declaration, these are still fit for purpose.

Background

In April 2001, the African Summit on HIV/AIDS, Tuberculosis and Other Related Infectious Diseases was held in Abuja, Nigeria.  At the conclusion, African governments made a number of formal commitments including to take all necessary measures to ensure that the needed resources are made available from all sources and that they are efficiently and effectively utilized.  In addition, they pledged to set a target of allocating at least 15% of their annual budgets to the improvement of the health sector.

At this same meeting the African governments supported the establishment of the Global Fund.

Sometime later, it became usual for government expenditure on health also to be measured as a percentage of gross domestic product (GDP), especially in the context of measuring progress towards universal health coverage (UHC).  For example, a Cambridge University article published in 2017 states that “An explicit target for government expenditure on health care relative to GDP is a potentially powerful tool for holding governments to account in progressing to UHC, particularly in the context of UHC’s inclusion in the Sustainable Development Goals. It is likely to be more influential than the Abuja target, which requires decreases in budget allocations to other sectors and is opposed by finance ministries for undermining their autonomy in making sectoral budget allocation decisions” and went on to say, “Our analyses point towards a target of government spending on health of at least 5% of GDP for progressing towards UHC.” Also, the African Scorecard on Domestic Financing for Health information page states that “It makes little sense for smaller and larger economies to have the same US$ per capita target.  Governments should therefore also spend >5% of GDP on health.”

A third measure for health expenditure is an absolute per capita target.  Two such targets were developed based on estimates of the resource requirements that low- and lower middle-income countries would have to meet in order to provide a set of core primary health care (PHC) services: (1) the Commission on Macroeconomics and Health (CMH) in 2001; and (2) the High-Level Taskforce (HLTF) in 2009. The CMH estimated that by 2015, the per capita resource requirements in low-income countries would total $38 (expressed in 2002-dollar terms), while the HLTF put that figure at $54 (expressed in 2005-dollar terms) for more comprehensive services.  Interestingly, the Cambridge University article referred to above states “in our view, it would be appropriate to use $86 as the estimate of per capita resource requirements for providing core PHC services in low-income countries.” – but recall that was in 2017.  These per capita expenditure amounts are in fact of no use because health care is not just about PHC services: all levels of health care and supporting services (such as ambulances, laboratories, research centres, regulatory bodies) must be included.

In 2019 the African Union set up the Africa Scorecard on Domestic Financing for Health.  The published scorecard uses the three measures of government expenditure on health referred to above: (i) Benchmark #1: Per Capita; (ii) Benchmark #3: as a % of GDP; and (iii) Benchmark #5: as a % of government budget (there is no reference to Benchmarks #2 and #4).  The 2019 scorecard shows 2016 data.  It was supposed to be updated annually but this has not happened.

Articles on domestic health financing often refer to government budgets.  While the budget execution rate might be fairly high in a few countries, it is generally low in many of the countries supported by Global Fund programs.  It is also noticeable that governments do not report actual expenditure against budget and what the variance means to their health system.

Actual government health financing performance

The following table compares 2000 (immediately pre-Abuja) with 2019 government expenditure on health as a percentage of total government expenditure in African countries.  For information, all the health financing data in this article has been sourced from the World Bank online database.

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In 2000, two governments were already spending over 15% of their total expenditure on health.  By 2019 there was only one country – South Africa – while 21 governments were actually spending a lower percentage than in 2000.  So much for the Abuja commitment.

Turning to the GDP comparative measure, the proposed target has been said to be appropriate for countries across economic development levels and applicable over time. For low-income countries, this target was expected to allow for progress towards universal PHC services. As GDP increases so the 5% is expected to translate into an increase in absolute financial resources and the ability to expand the range of health services covered.  That sounds great but it overlooks an important factor that affects the demand for health services: population growth.

Now is a good time to look at this measure of health financing because, due the impact of COVID-19 on health systems, the 2020 and 2021 health expenditure amounts will be not comparable with pre-2020 data.

The next table presents a comparison of health expenditure as a percentage of GDP for the years 2000 and 2019.  This shows that in 2019 South Africa was, again, the only country to meet the target of 15%. You could argue that some progress was being made because 26 governments, in addition to South Africa, were spending a higher percentage of GDP by 2019.  However, given the African Union’s active efforts to encourage increased public spending on health, it is disappointing to see that only 10 governments had increased their expenditure by more than 1% of GDP while 20 governments were spending a lower percentage by 2019 and 39 countries were not even half-way to meeting the 5% target.