Conclusions
Global health financing policy is in transition. Infusions of large amounts of grant money from new financing entities have changed the players involved in shaping global health policy. Decisions made by the World Bank and the IMF in 1999 requiring PRSPs as the basis for concessionary financing have pushed LICs to develop their health policies in the context of an overall strategy framework for poverty reduction that considers intrasectoral, intersectoral, and macroeconomic tradeoffs.
Clearly, neither increased domestic resource mobilization nor future economic growth will provide the resources necessary for LICs to finance their health needs, whether defined in terms of a basic package of essential health services or whether identified within the framework of the MDGs. Increasing official development assistance is thus critical for LICs to make progress in either respect. However, the projected magnitude and speed of scaling up raises serious questions about countries' absorptive capacity, aid effectiveness, predictability, and stability and about new investments' financial sustainability at the country and donor levels. Even though empirical evidence is still lacking, concerns have arisen that new sources and increased levels of funding for disease-specific programs will lead to verticalization and could distort health systems. The donor community and countries urgently need to reform the current system of DAH, to improve institutions in developing countries, and to develop mechanisms to ensure that donors meet their DAH commitments. Finally, MIC issues need to receive greater attention.
Global health financing policy makers face the following challenges:
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The architecture for formulating, coordinating, and implementing global health financing policy at the international and country levels needs to be improved.
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The donor community needs to harmonize procedures, ensure aid predictability, and guarantee longer-term assistance.
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Donors need to meet their development assistance obligations as well as provide more assistance to help countries improve their domestic resource mobilization efforts.
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The IMF needs to improve understanding of its fiscal programs and be more flexible in reconciling fiscal constraints with increased official development assistance and DAH.
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The global community needs to improve the knowledge base in terms of good (and bad) international practice with respect to health financing. In this context, absorptive capacity constraints on both the demand and the supply sides must be removed. Better use of existing tools, including cost-effectiveness analysis, and development of new tools are needed to help poor countries realistically prioritize their financing and spending options and deal with the tradeoffs between financing essential services and providing financial protection.
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The potential for verticalization as a result of increased levels of DAH needs to be assessed rigorously and empirically, taking into account the benefits of such assistance as well as its potential distortionary effects on other programs and on health systems as a whole. By focusing limited resources on a few targeted areas, countries can achieve impressive results in terms of disease control efforts; however, many disease eradication efforts have succeeded because such efforts enhanced overall system capacity.
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The existing assistance instruments need to be objectively and fully analyzed. Examples of potential inconsistencies, such as disease-specific program grants versus PRSPs, need to be highlighted and addressed.
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The issue of financial sustainability needs to be assessed objectively and apolitically. The international donor community needs to face up to the realities of those poor countries whose economies are not sustainable in the medium term and to consider redistributional policies to assist them.
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The donor community needs to put MICs on the agenda both in terms of their economic and social development and in terms of their use as good practice examples for LICs as they transition to MIC status.
Because of the different accountabilities of the various multilateral and bilateral organizations, global funds and alliances, and private foundations, coordinating global health financing policy has become increasingly complex. Given that international redistribution of wealth is central to meeting basic needs in poor countries, the lack of an effective international mechanism to enforce agreed-on transfers of wealth is problematic. Under these circumstances, the global community must help countries prioritize on the basis of realistic expectations of promised donor assistance and harmonization.
Providing countries with advice on good practice and assisting both LICs and MICs to develop equitable and efficient institutional structures, revenue-raising mechanisms, and spending prioritizations are important areas worthy of more international focus and collaboration. Assessments of the costs and constraints in reaching the health MDGs, taking into account the large increases in marginal costs to cover the most difficult-to-reach 5 or 10 percent of the population, are important knowledge products in a resource-constrained world. Making better use of cost-effectiveness information and developing better-costing tools are necessary for assisting countries, and donors could help by providing better information on where to focus policies to remove bottlenecks to the absorption of additional resources, particularly in terms of achieving the MDGs. A needed step for assisting LIC and MIC governments is developing and disseminating evidence about effective health financing polices, both in severely resource-constrained LICs that have achieved good health outcomes and in MICs that have achieved universal coverage with good health outcomes at reasonable spending levels. Last, the donor community must harmonize its procedures, simplify aid instruments, ensure the predictability of assistance, and create a more effective global policy environment.
Notes
1. For a detailed analysis of country-specific and global health expenditure trends, see Musgrove, Zeramdini, and Carrin (2002).
2. In addition to aid, countries receive significant financial inflows through foreign direct investment, expatriate workers' remittances, special targeted assistance, South-South support, and so on, and these inflows must also be taken into account (World Bank 2004b).
3. Clemens, Radelet, and Bhavani's (2004) study shows that aid can be somewhat effective in countries with weaker policy environments.
4. More recent data for all LICs indicate per capita spending of US$19 if the data are population weighted and US$25 if they are country weighted. The public share is 52 percent (country weighted).
5. One of the main funding organizations is the Bill & Melinda Gates Foundation, which is investing approximately US$1.35 billion per year, with a considerable portion of that allocated to global health issues.
