Ethiopia Health Financing System Overview.pptx

Overview of health financing in Ethiopia

1. Strategic Affairs Executive Office Health Economics, Financing and PPP Team The Ethiopian Healthcare Financing Landscape: the current system and priority areas

2. Structure of presentation Health financing background : scale of resources available, financing sources, management of funds, where money is spent. Mapping financing channels : how does national health insurance fit into the system? Challenges in the system : revenue raising, fragmented purchasing arrangements, and limited pooling. Healthcare financing strategy strategic objectives Key initiatives: strategic purchasing workstream, benefits package revision, private sector engagement, and health financing capacity building.

3. Current Funding Levels for Healthcare Per capita health expenditure reached $36 in 2019/20. This represents a 20% nominal increase and a 12.5% real term increase from 2013/14. THE in 2019/20 amounted to 6.3% of GDP. Ethiopia’s THE per capita is lower than the global LIC average of $43. Under the WHO’s SHA 2011 definition of primary healthcare, around 78% of total health expenditure was on primary care.

4. Healthcare Financing Sources Approximately one third of total health expenditure is funded by the government (32.2%), donors (33.9%) and households (30.5%), respectively. CBHI accounted for 0.9% of THE in 2019/20 This share will have grown with continued expansion of membership. However, given CBHI is targeted at the informal sector, its revenue raising potential is limited. Note that the main objective of insurance is to improve health service utilisation, removing financial barriers, etc.

5. Who manages health funds? Some donor funding is managed by the government, through channels 1a,1b, and 2, taking the total share of THE managed by the government to 45%. Channel 1a represents unearmarked funds channelled from the Ministry of Finance (raised from government revenue or from donors) to the MoH. Channel 1b represents earmarked funds channelled from MoF to MoH. Channel 2 represents funds channelled directly from donors to MoH. Regional Health Bureaus managed 65% of total government managed resources in 2019/20 . RHBs receive both federal grants and raise their own revenue. Remaining 19% of funding is directly managed by donors ( channel 3 ). A small share, 2%, was managed by private sector and insurance bodies in 2019/20.

6. Total health Expenditure by provider Where are the resources consumed? Health expenditure provided at public hospitals : 25,2% (~ USD 916 million ) Primary health care unit (PHCU): Spending on primary hospitals, health centers, and health posts accounts for 44% of total spending.

7. How does spending breakdown across treatment areas? Largest share of THE goes towards communicable, maternal and neonatal conditions. However, non-communicable diseases represent a growing share of health expenditure. Spending on NCDs more than tripled in absolute terms between 2013/14 and 2019/20, rising from 11% to 25% of Total Health Expenditure (THE). Most maternal/neonatal/family planning services are exempted and therefore a low percentage of spending on these activities comes from patients OOP. Over half (60%) of spending in 2019/20 was out-of-pocket. Urban patients enrolled in SHI may expect NCDs to be covered.

8. Public Health Insurance in Ethiopia Community Based Health Insurance (CBHI) introduced in 2011, initially piloting in 14 districts (woredas). It targets rural households and informal economy workers. Members pay a contribution, the government pays a federal subsidy, and an additional subsidy waiving contributions for indigents. CBHI coverage has been gradually expanded and CBHI is now present in over 90% of Woredas. Plans to introduce Social Health Insurance (SHI) covering firstly civil servants, and then formal sector workers more widely.

9. How are funds channelled to facilities?

10. Benefits Package Coverage All financing channels are supposed to combine to enable a 3-tiered benefit package (the Essential Health Services Package): Exempted services Cost sharing services Cost recovery services Fragmentation means that these tiers are currently poorly defined and often not reimbursed as intended Exempted services package is currently too broad to financed credibly.

11. Revised HCF Strategy

12. Strategic initiatives

13. Key challenges Resource mobilisation Domestic resources allocated to healthcare remain limited. Total government spending allocated to health was 8.5% (2019/20), vs. the Abuja declaration target of 15%. Question of how more earmarked funds can be raised in a fiscally constrained context. Sustainable financing - high donor dependency Limited pooling arrangements : restricts ability to cross-subsidise patients. Inequalities between regions in terms of their health needs and ability to raise revenue. CBHI currently pooled at the Woreda level and only covers informal sector workers. Purchasing arrangements are fragmented : various purchasers (EHIS, FMoH , RHBs, Donors) and heterogeneity across regions. Creates bureaucracy for facilities and limits their capacity to conduct resource planning and investment. Certain practices (e.g. fee for service, adjustment of block grants depending on fees received) lead to inefficiencies Certain policies aren’t implemented uniformly (e.g. exempt services). Defining benefits - Limited to universal entitlement around priority services (e.g. cost-effective, high financial burden, equity). Ensuring effective coverage

14. 14 Key priority areas

15. Domestic resource mobilization Resilient and equity health fund Enhancing emergency preparedness and response Financing high impact public health services to reach all segments of the population Reaching the unreached population groups and underserved geographic areas Other innovative financing mechanisms

16. Key initiatives going forward with oversight from the Health Financing TWG Expansion of CBHI and Introduction of Social Health Insurance Increasing insurance revenue generated through SHI. Increasing the level of pooling. Strategic Purchasing Reform blended purchasing model with capitation base payments and PBF additives. Informed by ongoing capitation and PBF pilots. Revision of the health benefits package Rationalising exempted service package and ensuring it is funded. Aligning CBHI package. Developing HTA institutionalisation roadmap Strengthening Private Sector Engagement Developing a private sector engagement strategy Accreditation of private facilities to provide insured services could be a key policy lever. Developing Health Financing Capacity Mapping financial management capability/analytical capacity to inform capacity development strategy.

17. Strategic Purchasing Advancing conversation on Strategic Purchasing: Three workshops held on strategic purchasing over last year: Agreed steps to explore how a blended purchasing system for PHC (with capitation as the core payment method) could be implemented in Ethiopia, and establish governance structure to oversee process. Progress implementing capitation and PBF pilots: Capitation project (led by EHIS and CHAI) being expanded to 40 woredas. MOH is initiating a PBF pilot in 3 regions with EHIS as purchaser. Next steps and key questions: 3-day workshop on PHC financing in August + HF TWG will be key for advancing next steps and engaging regional perspectives. Key question over the long term role of insurance service: offers potential to reduce fragmentation/introduce a uniform purchasing structure across regions.

18. Health Benefits Package Revision Exempted health services Revision and prioritization of services that are exempted Financing options - exempted service package that can be financed sustainably . Insurance benefit package revision Simultaneously revising CBHI insured services package to align with revised exempted service package to clarify financing source by intervention/remove overlaps. Institutionalising the process for health benefits package revision Harmonising/integrating process for revision of each health package, so that overlaps are avoided, financing responsibilities are clear, and funds can be availed sustainably to reduce need for user charges. Institutionalising a Health Technology Assessment Process to allow additions/revisions of health packages on an ad hoc basis. MOH producing roadmap to inform HTA institutionalisation.

19. Strengthening Private Sector Engagement Developing a private sector engagement strategy: MoH held an initial workshop on, and put together an initial draft of, a new private sector engagement (PSE) strategy document for the health sector. Sets out situation analysis, key modes of private sector engagement to explore, and outlines a pathway to more regular dialogue between the public and private sector. Accreditation of private facilities could tie into the national health insurance system – potentially could broaden the scope of services covered under SHI. Progression of public-private partnerships: Three public-private partnerships are ongoing in oncology, laboratory/diagnostic services, and medical gas production.

20. Building Health Financing Capacity Strengthening data availability down to facility level Strengthening data collection and reporting systems through digitalisation – will reduce bureaucracy in service reimbursement. Better data records down to a facility level are crucial to enable facilities to undertake financial planning autonomously. Strengthening sub-national health financing capacity for PHC Study health financing/economics technical capacity at the sub-national level. Assessment should enable creation of trainings that support effective financial management at the sub-national level. Should ensure that capacity of EHIS is strengthened through this process. Develop an overarching, sustainably financed health financing capacity building strategy Initiatives are often fragmented and short-term, lacking plans for sustainability. A governing strategy and oversight from the HF TWG could add value.

21. Conclusions Health system in Ethiopia operates under significant resource constraints. MoH/EHIS and development partners currently working to reduce fragmentation in the health financing system. Fragmentation in both purchasing (with many purchasers + high regional heterogeneity) and pooling (regional differences in funding and woreda level pooling for insurance). Strengthened public health insurance will play a key role in developing the health system EHIS/insurance structure provides a potential means of rationalising/ standardising purchasing arrangements across regions. SHI provides scope for raising additional resources for healthcare. The HCF can provide a key guiding document for health financing activity alignment and enables assessment of the adequacy of existing arrangements

22. Thank you! 22