Inadequate financing, not devolution, at the heart of unrest in health sector

Relatives take care of their patients on August 25, 2014 at the Coast General Hospital. Focusing solely on the shortcomings of devolving health services to the counties is tantamount to merely treating the symptoms. PHOTO | LABAN WALLOGA  NATION MEDIA GROUP

In Summary

• The government can protect the citizens against the financial cost of illness by expanding pre-payment systems through pooling resources.
• The Ministry of Health estimates indicate that tripling the current contributions to the National Hospital Insurance Fund (NHIF) through payroll taxes from employees and employers has the potential to generate in excess of Sh10 billion.
• Few countries where a huge portion of expenditure comes from direct financing by households through out-of-pocket expenses have achieved their health goals.

By SUBIRI OBWOGO
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The current wave of strikes by health workers over delayed salaries should trigger debate and reform on how we finance and deliver health care in this country.

Apart from delayed salaries, county health systems are faced with lack of drugs and medical supplies, worker shortage, burn-out, and long waiting times.

Focusing solely on the shortcomings of devolving health services to the counties is tantamount to merely treating the symptoms.

In Kenya, the public still bears most of the burden of health financing. According to the 2009/10 Ministry of Health estimates, households, governments, and donors accounted for 36.7 per cent, 28.8 per cent, and 34.5 per cent of the total health expenditure respectively.

However, few countries where a huge portion of expenditure comes from direct financing by households through out-of-pocket expenses have achieved their health goals.

For two decades after independence, in the 1960s and 1970s, the government supported free medical services. However, this changed in the 1980s with the introduction of cost-sharing. As a result, demand and access to public health services reduced as patients turned to mostly unregulated private clinics, pharmacies, traditional healers, and self-medication.

Although the Constitution devolved resources to county governments, a large portion of the health budget still goes to recurrent expenditure like salaries. For example, in Baringo County, out of the Sh2 billion annual allocation for health, Sh1 billion is for personal emoluments.

A low recurrent to capital expenditure ratio means that there are minimal resources available for infrastructure which, in turn, results in poor quality of services and diminished demand. Cost-sharing has had minimal impact.

A low recurrent to capital expenditure ratio means that there are minimal resources available for infrastructure which, in turn, results in poor quality of services and diminished demand. Cost-sharing has had minimal impact and accounts for only 10 per cent of the total health budget.

To achieve the objectives set out in the health policy and the Vision 2030 initiative, the national government must increase the health budgetary allocation to county governments.

The reality is that even with the provision that at least 15 per cent of the total collected revenue is to be shared among the 47 devolved governments, concerns remain about the adequacy of resources to ensure health service provision.

5.7 PER CENT OF BUDGET

In 2011, Kenya’s per capita expenditure on health was estimated at $11 (Sh900) against the $44 (Sh3,600) recommended by the World Health Organisation. Currently, the country allocates only 5.7 per cent of its annual budget to the health sector against the 15 per cent target of the Abuja Declaration.

Health care financing under the devolved governance structure is through various mechanisms such as budgetary allocation, grants or donations from development partners and charities, equalisation funds to be managed by the national government or the counties as a conditional grant for health, and money raised by counties through taxes, licences, and loans. The national government can also use the inter-governmental conditional grants to drive and incentivise policy directives.

The government can protect the citizens against the financial cost of illness by expanding pre-payment systems through pooling resources. Pooled resources include direct government financing, private and social health insurance, and community-based health insurance.

Benin, Nigeria, Senegal, Tanzania, and Uganda have implemented fairly successful community health insurance schemes.
Taxation offers the main source of government revenue for health expenditure. Possible sources of tax revenue to finance health care include earmarked taxes on specific commodities and services, sin tax, and payroll taxes. Sin tax has the potential to generate Sh15 billion.

The Ministry of Health estimates indicate that tripling the current contributions to the National Hospital Insurance Fund (NHIF) through payroll taxes from employees and employers has the potential to generate in excess of Sh10 billion.

With the administrative expenses and provider rebates accounting for 40 per cent and 30 per cent respectively, inherent institutional weaknesses dim further prospects of generating additional revenue from the fund. Transforming the NHIF into a social insurance scheme would offer comprehensive medical cover.

Dr Obwogo is a senior quality improvement adviser in health policy and systems strengthening. He works for an international organisation. bobwogo@hotmail.com.