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The Continuing Epidemiological Transition in Sub-Saharan Africa: A Workshop Summary (2012)

Chapter: 6 Health Financing in sub-Saharan Africa

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Suggested Citation:"6 Health Financing in sub-Saharan Africa." National Research Council. 2012. The Continuing Epidemiological Transition in Sub-Saharan Africa: A Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13533.
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6

Health Financing in sub-Saharan Africa

An important issue that came up repeatedly throughout the workshop was how the epidemiological transition will affect health-financing systems and attempts to achieve universal coverage. Riko Elovainio presented a conceptual framework for addressing this question, based on the World Health Report 2010: Health Systems Financing: The Path to Universal Coverage (World Health Organization, 2010), which outlines the types of health-financing levers available to policy makers in three broad areas: raising funds for health, reducing financial barriers to access through prepayment, and pooling of resources (spreading the financial risks of paying for care across the population) and efficiency.

In 2009 low-income countries around the world spent an average of 6.1 percent of their gross domestic products (GDPs) on health in 2009, lower-middle-income countries spent 6.2 percent, and upper-middle-income countries spent 7.0 percent. The region of sub-Saharan Africa spent 6.1 percent of its total GDP on health, far less than the 9.5 percent of GDP that the countries of the OECD spend on health.

In terms of U.S. dollars, low-income countries spent $25 per person on health in 2009 versus the more than $4,600 per person spent in high-income countries. In the Africa region of the World Health Organization (which includes all countries of Africa, not just the low-income countries), per capita health spending was $83, less than 2 percent of the average spending in high-income countries.

Elovainio commented that economic growth will facilitate additional spending on health in the low-income countries. The International Monetary Fund projects that, beginning in 2012, economic growth across the whole of sub-Saharan Africa should average 5 percent per year, which corresponds to a per capita GDP growth rate of around 3.5 percent per year (International Monetary Fund, 2011). This suggests that even if health receives the same share of GDP as it does now, health expenditures will grow, but it is likely that health spending will receive an increasing share of GDP and thus grow at an even greater rate.

All of the countries of sub-Saharan Africa have ways in which they can raise more funds domestically for health spending if they chose to do so. The pressure to find new funding sources is especially high in countries in which large informal economic sectors make it difficult to collect revenues, either in the form of taxes or in the form of health insurance contributions. This situation is often accompanied by tax collection systems that are inefficient and inequitable. Wage-based deductions are generally the easiest to administer and collect, and thus they offer the greatest potential for achieving an equitable system in which people earning more would pay more. However, in those low-income countries in which a relatively low (although usually growing) percentage of the workforce has formal paid employment, other options also need to be pursued. These other options might include “sin taxes,” that is, taxes on harmful products such as alcohol

Suggested Citation:"6 Health Financing in sub-Saharan Africa." National Research Council. 2012. The Continuing Epidemiological Transition in Sub-Saharan Africa: A Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13533.
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and tobacco, which have repeatedly been shown to be effective in reducing consumption and improving health (see, e.g., Chaloupka, 1999; Wagenaar, Salois, and Komro, 2009). Data from 22 low-income countries suggest that a 50 percent increase in the excise tax on tobacco would bring in $1.4 billion of additional revenue to those countries (Stenberg et al., 2010). Such taxes are now also being explored for use in discouraging the use of foods high in sugar or salt. The share of the resources from sin taxes allocated to health spending—that are, in economics terms, hypothecated for health spending—will be, of course, one of the main issues from the health financing point of view. Intuitively, the case for allocating a large percentage of sin taxes to health spending seems compelling. From the point of view of national ministries of finance, however, this is not always the case, and ministries of health will need to be persuasive in order to receive at least a part of the revenue. Furthermore, ministries of health need to ensure that the eventual hypothecation of sin taxes to health spending will not lead to cuts elsewhere in the health budget. The same questions concerning hypothecation are, of course, equally relevant to other earmarked taxation mechanisms that do not fall under the “sin tax“ category.

Judging from the examples of countries that have already introduced them, a variety of other direct or indirect taxation mechanisms are also feasible. Ghana, for example, increased its value added tax by 2.5 percentage points; these revenues that go directly to the National Health Insurance System. Gabon introduced a specific tax on certain profitable economic sectors, such as agencies that receive and transfer money overseas; revenue from this tax is hypothecated to cover the insurance contributions of people who are financially unable to contribute to the national health insurance fund. In 2009 Gabon collected the equivalent of $25 million with this levy on highly profitable corporations (Musango and Aboubacar, 2010).

Suggested Citation:"6 Health Financing in sub-Saharan Africa." National Research Council. 2012. The Continuing Epidemiological Transition in Sub-Saharan Africa: A Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13533.
×
Page 12
Suggested Citation:"6 Health Financing in sub-Saharan Africa." National Research Council. 2012. The Continuing Epidemiological Transition in Sub-Saharan Africa: A Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13533.
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Among the poorest and least developed regions in the world, sub-Saharan Africa has long faced a heavy burden of disease, with malaria, tuberculosis, and, more recently, HIV being among the most prominent contributors to that burden. Yet in most parts of Africa-and especially in those areas with the greatest health care needs-the data available to health planners to better understand and address these problems are extremely limited. The vast majority of Africans are born and will die without being recorded in any document or spearing in official statistics. With few exceptions, African countries have no civil registration systems in place and hence are unable to continuously generate vital statistics or to provide systematic information on patterns of cause of death, relying instead on periodic household-level surveys or intense and continuous monitoring of small demographic surveillance sites to provide a partial epidemiological and demographic profile of the population.

In 1991 the Committee on Population of the National Academy of Sciences organized a workshop on the epidemiological transition in developing countries. The workshop brought together medical experts, epidemiologists, demographers, and other social scientists involved in research on the epidemiological transition in developing countries to discuss the nature of the ongoing transition, identify the most important contributors to the overall burden of disease, and discuss how such information could be used to assist policy makers in those countries to establish priorities with respect to the prevention and management of the main causes of ill health.

This report summarizes the presentations and discussions from a workshop convened in October 2011 that featured invited speakers on the topic of epidemiological transition in sub-Saharan Africa. The workshop was organized by a National Research Council panel of experts in various aspects of the study of epidemiological transition and of sub-Saharan data sources. The Continuing Epidemiological Transition in Sub-Saharan Africa serves as a factual summary of what occurred at the workshop in October 2011.

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