The Fiscal Dimension and the Fiscal Implications of Financing of Public Health Care Services Systems

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The Fiscal Dimension and the Fiscal Implications
of Financing of Public Health Care Services
Systems in the CaribbeanPresented by Karl
TheodoreCoordinator, Health Economics UnitThe
University of the West IndiesSt.
AugustineTrinidad
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Fiscal Dimension

• The fiscal dimension of health financing refers
  to the size or quantum of funding via the state.
  It is generally strongly influenced by
• the values of the society and by extension the
  role of the state in the particular environment
  and
• and the values that guide government policy
  interventions.

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Fiscal Implications

• Fiscal implications are the consequences that
  result from the dimension of the fiscal
  intervention. The main issue here would be the
  sustainability of the fiscal support.

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The Caribbean Context

• As economists practicing in the Caribbean one
  cannot but reflect on Sir Arthur Lewis (1948)
  dictum that good economics begins with a
  concern for the conditions under which people
  live...
• In this regard the two issues that matter will be
  1)the adequacy and reliability of access lined
  to economic welfare and 2) the cost or
  affordability of health care linked to economic
  viability.

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Drivers of Fiscal Policy

• The assumption we make is that fiscal policy is
  driven by five main considerations that influence
  the fiscal dimension and implications of
  financing health care services
• governments perception of its role in the
  societya perception which would be influenced by
  the value system that guides its policymaking
• the level of financial resources available to the
  government

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Drivers of Fiscal Policy

• 3. governments understanding of certain key
  causal relationships, particularly the link
  between health spending and health outcomes as
  well as the impact of health on the functioning
  of the economy
• governments perception of the socioeconomic
  needs of particular segments of the population
  and
• 5. contingent civic or political pressures to
  which the policy makers feel they should be
  responsive.

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Driver 1 Role of the Government

• Health care is considered a merit good by
  Caribbean governments and this is reflected in
  fiscal planning.
• It is also true that Ministries of Health hold
  themselves responsible for the quality of all
  care, including that provided at private health
  facilities.
• Governments in the region have two main concerns
  in regard to fiscal outlay on health
• the impact of public health spending and
• the efficiency of that spending.

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Driver 2 Availability of Financial Resources

• Total Revenues
• In the Caribbean countries under study,
• total revenue experienced modest
• growth in some countries while in other
• countries, such as Trinidad and Tobago,
• the growth in total revenue was
• significant.
• Seven out of ten countries considered experienced
  average annual revenue growth between 6 and 9.
  Two countries experienced growth higher than 10
  and only one country saw growth of less that 3
  annually,

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Driver 2 Availability of Resources and the
Propensity to spend on Health

• Public Health Spending out of Revenues
• The Bahamas registered the highest percentage of
  public health care spending out of revenues
  averaging 14 between 1999 and 2005. Closely
  followed by Antigua and Barbuda and Barbados.
• For the same period, Trinidad and Tobago recorded
  the lowest percentage share of public health care
  spending out of revenues averaging 6.

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Public Health Expenditure as of Total Public
Expenditure
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Driver 2 Availability of Financial Resources

• National Health Spending
• When national spending on health is taken into
  consideration the government is the biggest
  spender in every country.
• In Guyana, over the period 1996-2005, the
  government accounted for 83 of national health
  expenditure, and averaged 71 in Antigua
  Barbuda, Dominica and Grenada.
• On the other end of the scale, in Trinidad and
  Tobago the governments share of national health
  spending averaged 42 over the same period.

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Driver 2 Availability of Financial Resources

• Public Health Spending as GDP

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Public Health Spending and GDP Fiscal Commitment

• Note that the trends are all very stable
• The overall average share turns out to be 3.6
  with a range between 1.5 and 5.2.
• In spite the rhetoric the region is well below
  the international (universal coverage) range of
  between 6 and 12 of GDP.

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Trend in Public Health Expenditure as of Total
Public Expenditure
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Trend in Per capita Public Health Spending (US
Dollars)
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Trend in Per capita Public Health Spending (US
Dollars)
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Driver 2 Availability of Financial Resources

• Public Health Spending and Per Capita GDP
• Over the ten-year period 1996-2005, the observed
  tendency particularly in Jamaica, was for the
  share of government spending on health to vary
  inversely with per capita income (an 11
  percentage decrease between period points).
• This phenomenon also occurred to a lesser degree
  in Barbados (-5) Dominica (-6), St. Lucia
  (-3) and St. Vincent and the Grenadines (-4).
• This countercyclical trend may be an indication
  of the governments concern for the equity
  dimension of its fiscal support.

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Driver 3 Causal Relationships and Fiscal Policy

• If fiscal outlays are to effectively impact on
  health status we would also expect to observe
  allocations in a number of health-related areas
  such as
• population feeding programmes
• the expansion of sport and recreational
  facilities
• subsidies on selected food items as well as on
  selected exercise and recreational equipment.
• Given the proliferation of chronic diseases in
  the Caribbean, these would be areas where
  governments may be expected to incur a cost.

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Driver 4 The Perception of Socioeconomic Needs

• The governments perception of the socioeconomic
  needs of particular segments of the population
  also impacts on fiscal policy. For example, in
  the Caribbean the health of the following groups
  has always been of immense interest to
  governments
• women
• children and
• the elderly.
• Ideally, policy would be informed by up-to-date
  health needs assessments. In practice, in the
  Caribbean, the public health systems are
  structured to ensure that the needs of the
  specific groups mentioned are looked after.

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Driver 5 Contingent Pressures

• In the Caribbean today there are contingent
  pressures emanating from issues like crime and
  the HIV/AIDS epidemic.
• The latter has led countries of the region to
  prepare National HIV/AIDS response programmes
  almost all of which benefit from international
  assistance and domestic budgetary support.

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Fiscal Implications

• The major issues surrounding the fiscal
  implications of public health care spending are
• Affordability/Sustainability. Given government
  commitment, are the projected financing
  requirements feasible in the light of expected
  future government revenues? If they are not, what
  kinds of adjustments can we expect? Tax reforms
  to yield larger revenues or a more modest
  approach to universal health care?
• Possibility of a bonus. An externality resulting
  from the governments fiscal support? If health
  expenditure has a meaningful productivity impact
  on the economy then this human capital effect
  will strengthen the fiscal position of the
  government, by expanding the revenue base of the
  country.

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Conclusion

• In this Caribbean context, with a significant
  burden of chronic disease and a growing burden of
  HIV/AIDS, and with governments acknowledging a
  major responsibility in the area of health the
  challenge of fiscal capacity will remain.
• Starting, as most of the countries do, with
  chronic fiscal deficits, the prospects for
  sustaining a universalist posture are not
  favorable. The region is at present significantly
  below international levels. The requirement for
  external support for specific areas will remain,
  certainly for the medium term.

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A ray of hope? (1)

• The ray of hope in all this lies in four things
• i) the agreement of countries to a regional
  response to the HIV/AIDS epidemic, through PANCAP
  the Pan Caribbean Partnership Against HIV/AIDS
  . This is a model which can be applied to other
  areas where we are all affected
• ii) the collaboration which has already begun in
  the area of chronic diseases
• iii) the preliminary discussions which have begun
  in respect of a regionally funded basket of
  essential services and
• iv) The growing recognition by governments of the
  region that the health systems of the region need
  to be modernized by the introduction of health
  information systems to monitor the quality of
  care and to track the costs of the system with a
  view to effecting the cost controls which would
  generate higher levels of efficiency.

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The Road Ahead

• So is universal health coverage possible in
  the Caribbean?
• It would seem that regional cooperation, tax
  reform and a commitment to higher levels of
  efficiency are the three pillars that will be
  needed to realize and sustain universal coverage
  in the Caribbean.