Reconciling devolution with health financing and public financial management: challenges and policy options for the health sector.

The interplay between devolution, health financing and public financial management processes in health-or the lack of coherence between them-can have profound implications for a country's progress towards universal health coverage. This paper explores this relationship in seven Asian and African countries (Burkina Faso, Kenya, Mozambique, Nigeria, Uganda, Indonesia and the Philippines), highlighting challenges and suggesting policy solutions. First, subnational governments rely heavily on transfers from central governments, and most are not required to allocate a minimum share of their budget to health. Central governments channelling more funds to subnational governments through conditional grants is a promising way to increase public financing for health. Second, devolution makes it difficult to pool funding across populations by fragmenting them geographically. Greater fiscal equalisation through improved revenue sharing arrangements and, where applicable, using budgetary funds to subsidise the poor in government-financed health insurance schemes could bridge the gap. Third, weak budget planning across levels could be improved by aligning budget structures, building subnational budgeting capacity and strengthening coordination across levels. Fourth, delays in central transfers and complicated procedures for approvals and disbursements stymie expenditure management at subnational levels. Simplifying processes and enhancing visibility over funding flows, including through digitalised information systems, promise to improve expenditure management and oversight in health. Fifth, subnational governments purchase services primarily through line-item budgets. Shifting to practices that link financial allocations with population health needs and facility performance, combined with reforms to grant commensurate autonomy to facilities, has the potential to enable more strategic purchasing.

Does Public Financial Management Save Life? Evidence from a Quantitative Review of PFM and Health Outcomes in Sub-Saharan African Countries.

Public financial management (PFM) theory suggests that improvements in the allocation, execution, and monitoring of public funds can result in improved sectoral outcomes, including in health. However, the existing literature on the relationship between PFM quality and health outcomes provides limited empirical documentation and insufficient explanation of the mechanics of that relationship. This paper contributes to the literature by estimating the correlation between PFM quality and health outcomes from a sample of sub-Saharan African countries over the period 2005-2018, using a pooled ordinary least squares (OLS) estimator. The analysis uses Public Expenditure and Financial Accountability (PEFA) scores as proxies for PFM quality. The findings indicate that countries with high-quality PFM tended to have the lowest maternal, under-five and noncommunicable diseases (NCDs) mortality. Among the standard PFM dimensions, the one associated with the higher correlation with maternal and under-five mortality was "predictability and control in budget execution." Better PFM quality was significantly associated with a drop in maternal and under-five mortality in countries which allocated a higher proportion of their budget to the health sector. In countries allocating a lower proportion of their budget to health, the correlations between PFM quality and the three mortality indicators were not significant. The negative correlations between PFM quality and maternal and under-five mortality were significant only in countries with more effective governance. These findings support an emphasis on strengthening PFM as a means of improving health service provision and health outcomes.

Public Financial Management as an Enabler for Health Financing Reform: Evidence from Free Health Care Policies Implemented in Burkina Faso, Burundi, and Niger.

In Burkina Faso, Burundi and Niger, the policy to remove user fees for primary care was carried out through significant adjustments in public financial management (PFM). The paper analyzes the PFM adjustments by stage of the budget cycle and describes their importance for health financing. The three countries shifted from input-based to program-based allocation for primary care facility compensation, allowed service providers autonomy to access and manage the funds, and established budget performance monitoring frameworks related to outputs. These PFM changes, in turn, enabled key improvements in health financing, namely, more direct funding of primary care facilities from general budget revenue, and payments to those service providers based on outputs and drawn from noncontributory entitlements. The paper draws on these experiences to provide key lessons on the PFM enabling conditions needed to expand health coverage through public financing mechanisms.

Do efficiency gains really translate into more budget for health? An assessment framework and country applications.

Efficiency has historically been considered a key mechanism to increase the amount of available revenues to the health sector, enabling countries to expand services and benefits to progress towards universal health coverage (UHC). Country experience indicates, however, that efficiency gains do not automatically translate into greater budget for health, to additional revenues for the sector. This article proposes a framework to assess whether and how efficiency interventions are likely to increase budgetary space in health systems Based on a review of the literature and country experiences, we suggest three enabling conditions that must be met in order to transform efficiency gains into budgetary gains for health. First there must be well-defined efficiency interventions that target health system inputs, implemented over a medium-term time frame. Second, efficiency interventions must generate financial gains that are quantifiable either pre- or post-intervention. Third, public financial management systems must allow those gains to be kept within the health sector and repurposed towards priority health needs. When these conditions are not met, efficiency gains do not lead to more budgetary space for health. Rather, the gains may instead result in budget cuts that can be detrimental to health systems' outputs and ultimately disincentivize further attempts to improve efficiency in the sector. The framework, when applied, offers an opportunity for policymakers to reconcile efficiency and budget expansion goals in health.

Fifteen years later: moving forward Heller's heritage on fiscal space for health.

Economist Peter Heller, writing a seminal paper published in Health, Policy and Planning in 2006, identified five opportunities for expanding fiscal space for health: raising revenue, reprioritizing expenditure, borrowing, using seigniorage and mobilizing external grants. The development of the initial framework marked a significant conceptual advancement in health financing, by situating health reforms within a broader macro-fiscal context. Fifteen years later, fiscal space for health is not viewed simply as a question of finding additional revenues but also as a matter of improving public financial management (PFM) in the health sector, specifically for publicly funded health systems. This paper advances the concept of budgetary space for health, which explores available resources generated through greater overall public expenditure, prioritized budget allocations, and improved PFM. The paper adds a critical component, unpacking the ways through which PFM improvements can maximize budgetary space for health. The approach fits the realities of public finances in the era of the Sustainable Development Goals. The key implication is that PFM aspects should be systematically included in assessments of budgetary space to inform more effective country dialogues between the finance and health sectors.

Improving fiscal space for health from the perspective of efficiency in low- and middle-income countries: What is the evidence?

BACKGROUND: Conceptual frameworks of fiscal space for health have traditionally considered health system efficiency improvements as a means to free up resources for the sector. However, there has been no comprehensive review of the evidence to confirm the relationship between efficiency and fiscal space. METHODS: We conducted a systematic review to synthesize evidence on whether efficiency gains increase fiscal space for health. We searched bibliographic databases for specific keywords - namely, fiscal space, efficiency and health - and identified 22 articles that examined links between efficiency gains and fiscal space for health. The articles, which encapsulated 28 case studies, were included in the analysis. RESULTS: The 28 case studies varied widely with regard to how efficiency was evaluated, the extent to which efficiency was explored, and how efficiency gains could be achieved. Half of the studies assessed both technical and allocative efficiency, and the other half assessed technical efficiency only. The indicators to examine potential inefficiencies varied substantially among studies. The most frequently cited inefficiencies stemmed from public financial management (budget implementation, budget allocation and strategic purchasing) and governance issues, even though these were characterized in various ways. The second most cited set of inefficiencies that caused health systems to function poorly were those related to health service delivery. Procurement and delivery of input factors was also mentioned in some studies as a source of inefficiency. Though most studies conceded that efficiency gains were a potential means to improve fiscal space for health, very few quantified the potential gains or explored practical mechanisms to translate efficiency gains into fiscal space for health. CONCLUSIONS: While the conceptual link between efficiency gains and fiscal space for health may be assumed, there is no direct empirical evidence proving that efficiency gains translate into more resources for the health sector. Mechanisms to translate efficiency gains into fiscal space are barely explored in the fiscal space literature. Public financial management rules and related rules for reallocating funds within the sector need to be further examined to guide countries in the transformation of efficiency gains into more resources for health.

Can Low- and Middle-Income Countries Increase Domestic Fiscal Space for Health: A Mixed-Methods Approach to Assess Possible Sources of Expansion.

There has not been a systematic effort to synthesize findings of domestic fiscal space for health (DFSH) assessments, despite the existence of a commonly applied conceptual framework. To fill this gap and provide support to policy makers designing health financing policies toward universal health coverage (UHC), this study uses both qualitative and quantitative methods to assess the scope of possible sources of DFSH in low- and middle-income countries (LMICs). First, the findings of 28 studies assessing DFSH in LMICs were reviewed. A quantitative assessment was then conducted to assess potential expansion from increased tax revenues, a greater prioritization of health in the overall budget, and improved technical efficiency of health spending in a sample of 64 LMICs. The analysis found that macroeconomic conditions and budget prioritization are the key sources of DFSH expansion in 90% of the reviewed studies. Improved efficiency was referenced as having high potential for DFSH expansion in 60% of the studies. The quantitative analysis converged with these findings and further confirmed that an increase in tax revenues is, on average, the largest source of potential DFSH expansion (95% confidence interval [CI], 60%, 96%) in the studied countries. However, even without injecting new revenues, reprioritization of budget and technical efficiency improvements could significantly expand DFSH (95% CI, 77%, 102%). While highlighting the critical role played by fiscal conditions and tax policies, the study provides strong rationale for explicitly incorporating efficiency as a core source of DFSH in a more systematic manner in future assessments.

Assessing the effects of removing user fees in Zambia and Niger.

OBJECTIVES: This study aims to overcome some of the limitations of previous studies investigating the effects of fee removal, by looking at heterogeneity of effects within countries and over time, as well as the existence of spill-over effects on groups not targeted by the policy change. METHODS: Using routine district health services data before and after recent abolitions of user charges in Zambia and Niger, we examine the effects of the policy change on the use of health services by different groups and over time, using an interrupted timeseries design. RESULTS: Removing user fees for primary health care services in rural districts in Zambia and for children over five years old in Niger increased use of services by the targeted groups. The impact of the policy change differed widely across districts, ranging from +12% and +194% in Niger to -39% and +108% in Zambia. Eighteen months after the policy change, some of these effects had been eroded. There was evidence that abolishing user fees can both have positive and negative spillover effects. CONCLUSION: These results highlight the importance of paying attention to implementation challenges and monitoring the effects of policy reforms which are often more mixed and complicated that they appear. The comparison of these reforms in two countries also sheds light on the potentially different ways in which free care can be used as a tool to improve access.