Fiscal space for the Tanzanian health sector
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1 Fiscal space for the Tanzanian health sector Chris James, Tomas Lievens, Alexandra Murray - Zmijewski, Jehovaness Aikaeli, Paul Booth December 9 th, 2014
2 Outline of presentation Presentation of analysis Policy question Approach and methodology Main findings Focus on questions of interest to this session DD Month YYYY 2014 Oxford Policy Management Ltd 2
3 Policy background and question Strong economic growth past decade but annual fiscal deficit >5% & debt to GDP ratio 45% Spending has been guided by MKUKUTA in 2007/8 2012/13 => health is not a priority & share of general government revenue to health: 9.4% Fiscal decentralisation: 40% of health expenditure goes through LGA Main sources of expenditure (2009/10)(change from 2002/3) Donors: 40% Households: 32% Government: 25% Policy question: What is the level of financial resources that Tanzania can make available for the health sector? How and over which time period will Tanzania be able to generate enough resources for UHC? DD Month YYYY 2014 Oxford Policy Management Ltd 3
4 How did we go about it? Resource needs 5% of GDP public spending or USD 86 per capita to ensure universal coverage for a basic package of services 14 October Oxford Policy Management Ltd 4
5 How did we go about it? Resource gap business as usual Does financing policy status-quo generate enough fiscal space? If not, what is the resource gap? 14 October Oxford Policy Management Ltd 5
6 How did we go about it? Additional fiscal space for health and HIV What is room for additional domestic resource mobilisation? Increased public spending Innovative sources of funding Health sector efficiency Borrowing 14 October Oxford Policy Management Ltd 6
7 How did we go about it? Resource gap with additional money for health and HIV Would additional domestic resources be sufficient to finance policy ambitions in health and HIV? 14 October Oxford Policy Management Ltd 7
8 Findings Large and increasing basic funding gap under policy as usual Government health spending remains 6% discretionary spending Health insurance rising to 13% of THE In 2024/25 gap is 11% of GDP / 46% of government budget DD Month YYYY 2014 Oxford Policy Management Ltd 8
9 Findings Additional sources of funding Prioritisation of health in budgeting process 15% of GGE to health in 2024/25 USD 773 million per year extra on average Covers 11% basic and 8% wider gap Health insurance coverage Current growth path 11% THE in 2013/14 to 13% in 2024/25 Accelerated growth 50% THE in 2024/25 Covers 42% basic and 30% wider gap DD Month YYYY 2014 Oxford Policy Management Ltd 9
10 Findings Current versus accelerated coverage by insurance DD Month YYYY 2014 Oxford Policy Management Ltd 10
11 Findings Innovative financing mechanisms M USD As % Wider Financing Gap As % Minimum Financing Gap Alternative Funding Sources M USD % -2.9% Alternative Funding Sources M TzSh 461, % -2.9% Earmarked Taxation 385, % -2.4% Remittances Levy 2, % -0.01% Airtime Levy 68, % -0.4% Alcohol Levy 256, % -1.6% Airline Levy 57, % -0.4% Mainstreaming 76, % -0.5% Private sector mainstreaming 76, % -0.5% DD Month YYYY 2014 Oxford Policy Management Ltd 11
12 Findings Efficiency savings DD Month YYYY 2014 Oxford Policy Management Ltd 12
13 Findings Basic financing gap with additional resources DD Month YYYY 2014 Oxford Policy Management Ltd 13
14 Findings Revenue from natural resources DD Month YYYY 2014 Oxford Policy Management Ltd 14
15 Findings Conclusions Tanzania not on a path to achieve UHC for a basic package of services in medium term Tanzania can take a number of policy initiatives to better align policy objectives with fiscal reality Health as a policy and budget priority Improved planning and budgeting Health insurance is vital Alternative financing Efficiency savings UHC costing study Lobby for international health funding DD Month YYYY 2014 Oxford Policy Management Ltd 15
16 Questions What information is needed to understand and negotiate realistic government health spending scenarios? Macro economic information Agreed assumptions for forward planning NHA data Government spending data Health insurance actuarial data Efficiency savings DD Month YYYY 2014 Oxford Policy Management Ltd 16
17 Questions How do fiscal and administrative decentralization interact with issues of sustainability and fiscal space? What additional challenges do they raise? Analytically: check data include or not LGA transfers Absorptive capacity comparison central and LGA spending Effective and efficient use of health resources DD Month YYYY 2014 Oxford Policy Management Ltd 17
18 Questions How can policy-makers ensure stability and predictability in the flow of funds to health from the budget? Differences between volatility in budget and spending PFM bottlenecks prevent full absorption => MOF reason to keep budget stable may be disingenuous Volatility and lack of predictability in budgeting to a large extend related to donors Engage budget authorities in need for long term planning and expenditure Provide projected cost and expenditure Shift financing to (off-budget, independently run) health insurance DD Month YYYY 2014 Oxford Policy Management Ltd 18
19 Questions Have health sector policy-makers been successful in earmarking more funds for health and what practical lessons and issues arise (beyond what theory is telling us successes and failures and the intrinsic concerns of Ministries of Finance against reduced fiscal policy flexibility)? MOF face choice between earmarked taxes and loss of flexibility, or higher allocations to health out of general budget with flexibility Earmarked taxes are relatively small in comparison with higher allocation to health from government revenue Earmarked taxes can be a two-edged sword / ensure additionality Earmarked taxes can help to manage and smooth financing transitions e.g. HIV from donor dependent to budget funded DD Month YYYY 2014 Oxford Policy Management Ltd 19
20 Questions Are there other options and mechanisms to operationalize a prioritization process for health in the public budget and to assure stability in funding flows including during times of economic crises? Budget literacy is a necessary condition Demonstrate health spending contributes to national planning objectives ( health is wealth ) Leverage health system efficiency and effectiveness reform to obtain higher allocations to health UHC is a society-wide project requiring long-term commitment from different parties => create UHC governance bodies attached to prime minister / president DD Month YYYY 2014 Oxford Policy Management Ltd 20
21 Questions Where does efficiency fit into this discussion? How does the capture of efficiency gains (e.g. within facility, within the health sector, or back to the Treasury) play out in practice, and what are the links to PFM rules? Commitment to greater efficiency is powerful in long term commitment for increased budget for health Efficiency savings often longer term and difficult to quantify Programme budget can provide mid-way solution Strategic purchasing reform => ensure efficiency savings are available to health sector DD Month YYYY 2014 Oxford Policy Management Ltd 21
22 Thank you
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