Financing healthcare in low-income countries

We organised a roundtable discussion a few weeks ago, attended by many NGOs and academics, to share knowledge and understanding on how to finance healthcare in low-income countries. Save the Children, as well as many NGOs present at the event, have done a lot of research, policy and advocacy work on this in the past.

The Taskforce for Innovative Financing (and before that the Commission for Social Determinants and Health) provided an indication of the funding levels needed to fill the financing gap to reach the health-related Millenium Development Goals (up to an additional $45 billion in 2015). While donors need to play a major role in filling the financing gap, resources raised at the domestic level by individual developing countries will also need to play a major role.

So far, out-of-pocket expenditures, particularly user fees, have provided the main source of funds to finance health care in low-income countries. A global consensus is building that user fees are regressive — the poor pay more of their income than the rich to pay for healthcare. They’re also not cost-effective — it often costs more to administer a user fee system than it raises. They also deter poor people from accessing healthcare because many poor people simply do not have the money needed to pay for healthcare.

As a result of the problems, we’re calling for user fees to be removed at the primary healthcare level. However, the removal of user fees is not yet widespread, as there’s confusion on what the best alternative to financing healthcare should be.

David Mepham (Director of Policy – Save the Children UK) highlighted the importance that health financing has had for Save the Children for many years, and the central role it plays within the newly launched Everyone campaign

Nearly 9 million children under five die every year from preventable causes, and many mothers are still dying as a result of pregnancy related issues. The need for health systems strengthening is evident, as well as the need to find the necessary financial resources to stop this tragic number of deaths.

We organised the discussion around these alternative financing mechanisms, and we reached a general consensus: user fees are regressive and must be replaced by progressive alternatives, which ideally would be a combination of taxation and social health insurance. You can read the full report of the discussion here.