Resource Allocation for Family Planning in Developing Countries: Report of a Meeting (1995)

Resource Allocation for Family Planning in Developing Countries

Family planning programs in developing countries are typically subsidized: contraceptive supplies, counseling, and clinical services are distributed either free of charge or at prices well below full cost recovery by government agencies and nongovernmental organizations (NGOs). Due to the large numbers of couples now entering peak ages for childbearing and the increasing reliance on modern contraception for fertility control, the demand for subsidized services is rising rapidly.

Increased resources for family planning programs can be expected, both from aid donors and the governments of developing countries. The Programme of Action adopted at the International Conference on Population and Development in Cairo in September 1994 estimated that the family planning component of a comprehensive reproductive health strategy would cost $10.2 billion in 2000 and $13.8 billion in 2015 (costs in 1993 US dollars —United Nations, 1994, sect. 13.15.a). The global reproductive health strategy as a whole would cost $17.0 billion in 2000, of which $5.7 billion would come from donor countries, if the commitments made at the conference were all fulfilled (sec. 14.11). This would represent approximately a tripling or quadrupling of current donor funding for family planning and reproductive health programs in developing countries.¹ The 1994 conference was the first in the series of decennial United Nations popula

tion conferences to give specific cost estimates, but it was notthe first to call for more funding for family planning. As Paul Demenyhas written, “Heeding the recommendations would inevitably placeheavy demands on limited administrative and organizational capacitiesand financial resources in developing countries. . . . Constraintson expanding the range of government activities are supposed to belessened by greatly expanded international assistance, even thoughexpectations in this regard are less than fully supported by pastexperience” (Demeny, 1994: 13).

Even with significant increases in funding, family planning programs may still have to accommodate to lower levels of public expenditure per client, if targets for expanded access to services are achieved. There are two broad possibilities for reducing average subsidies: (1) use resources more efficiently and (2) raise funds from private sources (including fees paid by clients) to offset proportional decreases in public-sector funding. The first category can be subdivided further into measures that increase the efficiency of programs, without trying to change the basic design of subsidized services, and measures that attempt to target services more precisely to people who need the subsidies to achieve the socially desired goals.

The Committee on Population of the National Academy of Sciences/National Research Council organized a meeting in Washington, D.C., in July 1994, at which research results and program experiences bearing on these alternatives were discussed. The purpose of the meeting, which brought together researchers and officials from developed countries, international agencies, and developing countries, was to exchange ideas about what current research has to say about the interconnected themes of program costs, effectiveness, and financing, and to point out the major gaps in our knowledge. This report summarizes both the background papers prepared for the meeting and the presentations and discussions at the meeting itself.

The meeting did not attempt to generate consensus on new cost estimates taking into account expanded goals for reproductive health enunciated in the Programme of Action, although the implications of reproductive health goals for data and research needs in family planning were discussed at several points.

Some idea of the scale of the problem, and its variability across countries, can be seen from column 1 of Table 1, showing the percentage increase in the number of women aged 15-49 expected between the years 1992 and 2000. If contraceptive prevalence rates (and the proportion of women sexually active) were to stay the same, this same rate of growth in the number of couples using contraception would be required. If, by contrast, the contraceptive prevalence rate were to increase by 15 percentage points over its level in the late 1980s² (or by half the increase required to reach replacement-level fertility, whichever is

less), then the rates of growth in the numbers of contraceptive users required would be those shown in column 2. As the table shows, the countries with contraceptive prevalence rates below 40 percent in national surveys in the late 1980s face the greatest challenges during the 1990s. For the total fertility rate to drop by approximately one child per woman by the year 2000 (which is not out of line with targets adopted by many governments or assumed in projections), the numbers of contraceptive users would have to more than double in Jordan, Kenya, and Pakistan and to more than triple in Nigeria.

Bulatao (1993) estimates that expenditures on family planning in developing countries in 1990 amounted to between $4 and $5 billion. Official development assistance (grants and loans) for the population sector accounted for about a

fourth of this total. User expenditures, Bulatao reckons, have accounted for another fourth of total expenditures, with governments of developing countries funding about half the total. All these figures, including those for development assistance, are very uncertain. Estimates of the required increases in expenditures during 1980-2000 have been based on various assumptions, but they generally find that increases of between 3 and 5 percent per year would be required to maintain a fertility decline at the current pace (Bulatao, 1993; Janowitz et al., 1990).

International aid to the population sector is currently estimated by the United Nations Fund for Population Activities to be just over 1 percent of official development assistance, allowing room for some growth even in times of stagnant overall spending on aid. Very few governments of developing countries spend as much as 1 percent of their public-sector budgets on family planning (Ross et al., 1992: Table 17), so, again, even large relative increases could be accommodated without much, if any, impact on overall government spending. Global averages, of course, can mask considerable variation among countries.

At the same time that the numbers of clients (and potential clients) are growing rapidly, family planning programs are being pressed to offer services of higher quality and more comprehensive services to meet women's long-neglected reproductive health needs. Some of the reforms called for in the interest of improved quality will not require more resources, in all likelihood. Attention to reproductive health services and higher-quality services, even when they add to costs, may lead to greater cost-effectiveness, if desired outputs increase more than proportionally to the increased cost of program inputs. But even salutary reforms take time, managerial attention, and resources to implement. In many countries, family planning programs will be faced with the need to expand, improve efficiency, and diversify and improve their product—all in a relatively short time.

Dean Jamison discussed criteria for public provision or financing of health-related services, focusing on market failure and poverty alleviation arguments and the potential for targeting interventions. Following the line of argument for health services in general that was laid out in the 1993 World Development Report, Investing in Health (World Bank, 1993: 55-58), he distinguished two arguments for public financing of services: poverty alleviation and market failure. Insofar as poverty alleviation is the rationale, then an important characteristic of a service is its potential for targeting those who need it and would not get services without public provision or subsidy. The rationale for using family planning subsidies as a way to alleviate poverty is weak, he argued, since family planning services constitute a small part of any family's budget (smaller, at any rate, than food and other health care), and subsidies “leak” to the nonpoor. The

market failure arguments apply most strongly to services that provide basic information about family planning and are less applicable to clinic services. In implementation, however, the distinction between providing information and providing services often breaks down: especially when programs are new, the only way to provide information about the contraceptive methods and their advantages and disadvantages may be through provision of services of reasonable quality, which then generate information dissemination by satisfied users.

Thomas Merrick noted the interrelatedness of the arguments for public-sector involvement and the discussion of multiple outputs of family planning and reproductive health programs. If the only goal of a program is fertility reduction, then the argument for a broad-based subsidy is weaker than it would be if the reproductive health goals are included. Reproductive health problems are a burden on the poor, and, as with control programs for other infectious diseases, the programs that look good on cost-effectiveness grounds often look good on equity grounds as well. Arguments for public financing based on the concept of externalities have traditionally been used to justify subsidies for fertility reduction, and they could also be applied to infectious disease control. In both cases, services that benefit individuals also benefit others; without public financing there would be underinvestment in such services.

Akin added the merit-good argument from welfare economics to the market failure one discussed by Jamison.³ Even well-functioning markets for health care may not bring family planning and clinical services to sparsely populated regions or isolated poor populations. Yet society may still define access to family planning and reproductive care as a right to be enjoyed by all citizens and therefore choose to subsidize private provision of services targeted to those areas or provide services through the public sector. A country would not have to make an all-or-nothing choice between public- and private-sector provision and financing, based on market failure arguments, if the public sector were considered as an adjunct to the private sector.

This discussion fit within the larger context of the international debates about the role of family planning in population and health policy. If family planning (and reproductive health services more generally) is considered, as environmentalists do, a means of saving humanity or the planet as a whole from ecological disaster, then it has a strong claim on public services. If it is seen mainly as a means of improving women's and children's health, then it should properly be considered in resource allocation terms along with all the other possible means of doing so: vaccinations, injury prevention, antibiotic treatment for tuberculosis, and so forth, with each country or region having its own customized version of the generalized comparisons made in the 1993 World Develop-