THE LONG AND TORTURED ROAD TO

ADEQUATE, SUSTAINED, AND SPENDABLE

DOMESTIC AND DONOR FINANCING FOR HEALTH

Professor Brook K. Baker

Northeastern University School of Law

Program on Human Rights and the Global Economy

Health GAP (Global Access Project)

April 2009

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Introduction

Developing countries, especially low-income countries, confront myriad, nearly overwhelming health needs. The burden of infectious disease remains high, the HIV/AIDS pandemic is in full force, and the onslaught of chronic diseases is growing.  The promise of primary care for all – the rallying cry of Alma Alta – has not been met and instead was eviscerated to a shadow of itself – selective primary care.  Erosion of terms of trade, oil price shocks, rolling global recessions, high interest rates, and skyrocketing debt greatly reduced domestic resources, eroded foreign currency reserves, and delivered developing countries to the neoliberal disciplines of commercial, bilateral, and multilateral lenders in the last decades of the 20th century.  Under the stern austerity and privatization prescriptions – structural adjustments – of the international financial institutions (IFIs) that eventually consolidated developing country debt, developing countries were required to disinvest in health and other social sectors, reduce their production of health professionals and depress their wages, and neglect their health infrastructure and basic health systems.  In the wake of powerful economic forces and IFI mandates, developing countries, especially low-income countries, have far too few resources to address their continuing crises in public health, health care services, and health system capacity.

Galvanized by the AIDS movement, global health activists have succeeded in refocusing global attention on the burden of disease in developing countries and on the need for greatly increased resources from both domestic and donor sources.  Although activists have succeeded in the first rounds of advocacy in lowering drug prices, creating new funding mechanisms, and refocusing health care delivery for certain priority diseases, their efforts are thwarted at present because of key informational gaps and poorly understood structural barriers.  At present, because of incomplete and scattered information, health activists are left with multiple questions, only some of which have been answered and even then often in confusing and contradictory ways.

• How much money is needed for Universal Access to HIV/AIDS prevention, treatment and care? For tuberculosis?  For malaria? 
• How much is needed for newborn and childhood health and immunization?  For maternal health?  For sexual and reproductive health?   
• How much more is needed for comprehensive primary health care prevention and treatment for both infectious and chronic diseases? 
• How many resources are needed to build health education capacity and to train, hire, and retain an expanded, equitably distributed, and diverse cadre of health care workers that can deliver Millennium Development and other health goals? 
• How much money is needed to rehabilitate failed and failing health systems in developing countries and how much is required in addition to build health infrastructure including district and community-based health centers? 

Even if health activists knew how much total money is needed for comprehensive health services over the short, medium, and long term, other questions remain. 

• How much are developing countries spending right now and how much more can developing countries afford to pay from private and public resources, especially the poorest countries and those with the highest disease burdens? 
• Even if developing countries committed a greater percentage of their government budget to health and succeeded in collecting more tax revenue and even if they risk-pooled public and private resources to equalize access to health care and to avoid catastrophic out-of-pocket expenditure, could they realistically meet minimum and then increasing standards of health care provision?   
• If not, what are the resulting financing gaps, globally and nationally, and what are international donors doing to fill them? 
• Are rich countries committing adequate, sustained, and predictable donor financing for health so that developing countries can plan and expand health care capacity and implement high quality public health and health care services? 
• Are they committing high quality, long-term, and easily coordinated aid? 
• Are they giving in the right mix for general or health sector budget support, sector-wide approaches, and program-or project-based health initiatives? 
• Are they building capacity for government ownership, planning coherence, and operational sustainability?

Finally, even if activists knew how much money was needed and knew that donors were going to fill predictable funding gaps with adequate, sustained, and coordinated resources, there are concerns whether countries are going to be permitted to spend the money to make needed investments in health.   Or, pursuant to long-standing macroeconomic policy prescriptions and advice, is the International Monetary Fund (IMF) going to constrain both domestic and donor spending on health (and health-related education)?  More particularly:

• Will the IMF cap spending or use fiscal deficit and inflation targets to offset increased donor resources with reduced domestic expenditures? 
• Will the IMF continue to require diversion of resources to currency reserves and debt reduction, thereby postponing immediate, needed investments in health?

One would think that answers to these questions and policy concerns would be readily accessible, that the World Health Organization, the World Bank, and others would provide robust analyses and updated figures on global health financing needs and funding gaps, category-by-category and in total.   In addition, one would think that these entities would act boldly to assist developing countries to develop complementary, bottom-up, and needs-based estimates.  Finally, one would expect that there would be good information on donor resources for health and its subaccounts, as well as an analysis of whether these donor resources are creating expansion and additionality of financial resources in developing countries or whether substitution is occurring because of macroeconomic constraints, budget caps, or other reasons.  A few detailed papers have been written including the WHO Commission on Macroeconomics and Health, Investing in Health for Economic Development (2001)1 and the World Bank, Health Financing Revisited (2006)2, but even these more comprehensive reports fail to address all of the questions outlined above.  In sum, global institutions are not meeting advocates’ and decision-makers’ informational needs, though they have produced thousands of pages of disconnected and incomplete analyses. 

Because of this information gap, civil society activists who work on HIV/AIDS, tuberculosis, and malaria, on child and maternal health, on sexual and reproductive health, on human resources for health and health system strengthening, and on primary health more broadly are struggling to understand the scope of financing needs and the contours of the global funding architecture and its coordination, especially in resource constrained settings.  They need these figures and an understanding of institutional arrangements so that they can advocate for adequate, sustained, spendable, and coordinated financing for health.  They need these figures so that they can try to make sure that the major global health initiatives (GHIs) are responsive to both priority health needs and to broader health system strengthening and that GHIs improve coordination and simplify the global architecture so that the transactional burdens on developing countries are lessened.  And they need to understand the barriers to global financing for health, including donor policies and IMF macroeconomic conditionalities.

This paper takes a small step in trying to outline partial answers to some of these global health financing questions so that health activists will have at least ballpark estimates of aggregate and specific health financing needs and a rudimentary understanding of the emerging architecture of global health initiatives, donor assistance for health, and the new coordinating entities and institutional players cluttering the global health scene.  The paper hopes to provide resources for advocacy and the means for greater coordination between civil society groups currently active in UNAIDS, the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund), Global Alliance for Vaccines and Immunizations (GAVI), and the International Health Partnership and Related Initiatives (IHP+), UNITAID, and the many other health activists from the North and the South who are working on other global health initiatives, on domestic health financing needs, and on multilateral and bilateral funding for health.

First the paper will document recent trends in health spending, particularly in developing countries, and current levels of donor assistance for health.  In addition, to discussing aggregate amounts, the sources of funding, and the difference between commitments and disbursements, the paper will discuss how donor assistance is dispersed and the quality of this assistance.  Second, the paper will identify developing country health resource needs, projected funding and funding gaps, relying as much as possible on existing estimates for attaining health Millennium Development Goals, HIV/AIDS, tuberculosis, and malaria goals, maternal and newborn health goals, sexual and reproductive health goals, and minimal densities of needed health care workers.   Third, the paper will undertake a critical assessment of global health financing by the World Bank, President’s Emergency Plan for AIDS Relief (PEPFAR), the Global Fund, the E.C., the U.K, and IHP+.  Fourthly, the paper will analyze unwise macroeconomic and monetary policies originating in the International Monetary Fund (IMF) that are all too often accommodated to by compliant officials and beneficiary elites in developing countries.  In addition to discussing the basic operational framework of the IMF and its macroeconomic assumptions that restrict more expansive spending of domestic and donor resources in health, the paper will discuss the programmatic impacts of IMF policies on actual spending of domestic and donor resources and the resulting struggle to expand health care capacity and service delivery.  Finally, the paper will very briefly outline some of the funding-gap and anti-IMF campaigns that are underway and the advocacy choices that health activists have for greater collaboration and synergy in the collective effort to realize the human right to health.

FOOTNOTES:

The World Bank publishes periodic reports on health financing and on donor assistance for health, but neglects to undertake rigorous analysis of resource needs that address both a minimal standard of health services and the progressive realization of comprehensive health care for all.  The World Health Organization publishes occasional reports on funding needs for a minimal basket of care, for various priority disease initiatives, and even for human resources for health, but neglects to aggregate and update those figures on regular basis or to use such aggregated figures to set hard targets for resource expansion. 

This paper does not address the financing needs for addressing the social determinants of health, the so-called structural features of the global, national, and local economy that enhance or debilitate community and individual health.  These resource needs are likely to be an order of magnitude larger than the health care service delivery needs discussed here.

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