The Challenge
Effective health financing policy is critical for supporting country movement toward Universal health coverage (UHC). Sustaining this progress requires that a country’s health financing system routinely generate sufficient — and largely domestic — resources to expand and sustain access to high-quality health services with financial protection. Evidence and experience have shown that public resources are fundamental to ensuring efficient and equitable progress toward UHC, so commitment to UHC also means significant fiscal commitment from governments.
But more money for health will not help achieve UHC if it cannot be used effectively to ensure priority services and interventions reach the people who need them. The way funds flow through the system and ultimately reach frontline services providers matters for ensuring access and quality of care, while protecting people from financial hardship.
Since public funds are the cornerstone of sustainable financing for UHC in most countries, the public financial management (PFM) system — the institutions, policies and processes that govern the use of public funds — plays a key role in how funds can be used.
Making better use of public budgets for UHC means getting back to the basics of the budget process and ensuring that PFM and health financing objectives and systems align with each other. This often means a closer link between policy and budgeting, or program-based budgets that allocate funds to service packages and interventions rather than inputs like buildings and staff. But specific measures may be called for to address the particular needs of health budgeting, such as allowing pooling of health funds across different revenue sources, providing mechanisms for intergovernmental transfers to improve equity, allowing payment of health care providers for service outputs and performance, and giving providers the flexibility to manage their resources and deliver services in a responsive way.
The Opportunity
Improving alignment between the PFM system and health financing system requires ongoing dialogue between health and finance authorities and other entities, such as local governments. Since 2014 R4D has been partnering with WHO and others on a Collaborative Agenda on Fiscal Space, Public Financial Management and Health Financing Policy (“the Collaborative Agenda”) to provide evidence and resources to support countries improve this dialogue to make better use of public budgets for health.
Our Work
As a key technical partner on the “Collaborative Agenda,” R4D has led the development of a series of products that aim to support dialogue at the country level to better align PFM systems and health financing for UHC.
Recently released
- Aligning public financial management and heath financing: Sustaining progress toward Universal Health Coverage. Health financing and public financial management systems often lack a shared framework and language to speak to one another, despite having similar goals and objectives for using government resources well to meet population needs with accountability. The first product in the series is a WHO Health Financing Working Paper that lays out the areas where PFM systems and health financing policy share objectives and reinforce each other, as well as potential sources of misalignment and their consequences for revenue raising for health, pooling, and purchasing. It offers guidance for improving alignment so that budgets can begin to work better to sustain progress toward UHC. The paper draws on a vast stock of country experience and links to 14 different global resources on PFM and health financing.The paper builds on earlier work by R4D’s Cheryl Cashin to outline the key components of the macroeconomic, fiscal and public financial management that need to be considered for an informed health financing discussion at the country level.
- Earmarking for Health: From Theory to Practice. Many countries consider earmarking as a mechanism to increase fiscal space and mobilize domestic resources for the health sector, to finance progress toward universal health coverage (UHC), or to fund other health priorities. Earmarking involves separating all or a portion of total revenue — or revenue from a tax or group of taxes — and setting it aside for a designated purpose. Earmarking has become part of the global discussion on domestic resource mobilization for health, particularly as countries transition from donor support and work to achieve health system goals as well as other targets.The arguments for and against earmarking are numerous, but they often remain theoretical. Despite vast country experience with this policy instrument — at least 80 countries earmark for health — little empirical evidence has been introduced into the debate.The 2nd product in the R4D-WHO series of products under the Collaborative Agenda, Earmarking for Health: From Theory to Practice, discusses the theoretical foundations of earmarking, and it analyses country experience with earmarking for health and its impact on health sector budgets and the broader fiscal environment. The goal is to provide useful information to health and finance authorities, and to the international partners who support them, on the practical realities of designing, adopting and implementing earmarking policies.The paper draws on a variety country experience and practical methods:
- A typology for characterizing earmarking policies for health to better understand which features of these policies are most important for results
- A scan of international experience to create a living database for crowd-sourced research of cases of earmarking revenues for health
- A JLN-style learning exchange to share and synthesize practical country experience in a structured way. Representatives from Indonesia, Ghana, Philippines and South Africa participated in an in-person exchange and two others (Estonia and Viet Nam) contributed their experience remotely.
- Synthesized practical country experience in a final knowledge product for policy guidance including, a practical check list for policymakers and a structured questionnaire for countries to assess new or existing earmarking policies.
- Process guide to assess alignment between public budgeting practices and health financing goals. Building off of an existing OECD budget survey, WHO and R4D have prepared a process guide to assess alignment between public budgeting practices and health financing goals. This companion piece to our WHO Health Financing Working Paper acts as a practical tool that builds dialogue by taking country health and finance stakeholders step-by-step through each stage of the health budgeting cycle to identify bottlenecks and potential improvements in alignment between the PFM system and health financing objectives for UHC. Similar in structure to the JLN’s Provider Payment Assessment Guide, this guide offers a practical, participatory approach for countries to define the problem and objectives, compile stakeholder input, and compare the current situation to benchmarks for good practices. The aim is to produce a roadmap for action that can be championed by those involved in the analysis process, and to help ensure implementation success. This guide has been test driven in Kenya and Tanzania, as a part of work supported by both Global Fund.
Focus on Process Innovation
Through this work, we are developing practical approaches and tools that focus on policy implementation and process innovation for multi-stakeholder engagement and dialogue at the country level, including:
- Practical guides that take countries step-by-step through participatory processes to identify bottlenecks and actionable policy solutions
- Other practical tools, such as checklists and questionnaires to help countries systematically assess new or existing policies
- Crowd-sourced country experience
- Creating opportunities for practitioner-to-practitioner knowledge sharing
