Health Sector Expenditure Framework HSEF A Multiyear Spending

Health Sector Expenditure Framework (HSEF): A Multi-year Spending Plan for the Department of Health Rosario G. Manasan

Outline of presentation • HSEF/ Purpose • Estimates of resource requirements and gaps in the context of DOH budget reforms • Alternative HSEF scenarios

What is HSEF ? • medium –term expenditure estimates for the health sector • compares cost estimaterequirements with the amount of funds that is projected to be available for the implementation of priority and critical programs and projects i. e, Fourmula One for Health PPAs

WHY HSEF? IMPORTANT INPUT FOR THE IMPROVEMENT OF PUBLIC FINANCE MANAGEMENT • Injects policy and strategic focus at the budget preparation stage • Strengthens the impact of policy priorities on budget allocation • Commits decision-makers to a sustainable fiscal policy and a clear set of sectoral priorities • Encourages a medium –term/ multi-year perspective to decision-making

POLICY AND STRATEGIC FOCUS NOH F-1 MTPDP MDGs

Estimates of resource requirements • Estimates of resource requirements for various programs in health sector derived in this study are reflective of some efficiency improvements in service delivery üestimates assume lower wastage factors üestimates assumes better targeting of subsidies

How much is needed to meet MDGs?

How much is the resource gap?

How much is required for SHI-IP? How much is the resource gap?

DOH Spending patterns and trends (1)

DOH Spending patterns and trends (2) Reduction in real per capita spending on public health is dramatic. Reduction in real per capita spending on tertiary care is less so.

What needs to be done? Need to increase or secure allocations for public health; justified because of public good nature of public health Need to secure nat’l subsidies for premium to indigent program of PHIC and to ensure sustainability of retained hospitals

What needs to be done? (2) Need to reallocate funds or liberate funds by increasing cost recovery and reducing subsidies to retained hospitals and regulatory agencies

Why liberate funds from hospitals? National government subsidies to retained hospitals is said to be inefficient and inequitable üInefficient because hospital subsidies can benefit more people if converted to social health insurance premium subsidies üInequitable because access to retained hospitals tends to be limited to residents of mostly well-off urban centers

Budget for service delivery – hospitals (1)

Budget for service delivery – hospitals (2)

Budget for service delivery – hospitals (3)

Budget for service delivery – hospitals (4)

Budget for service delivery – hospitals (5) 1. Given this perspective , there is scope to reallocate resources away from retained hospitals. 2. “Financing F 1” paper proposes that retained hospitals contribute at least 5% of their MOOE allocations to support essential F 1 programs in exchange for greater access to and more flexible use of user fees and PHIC reimbursements.

Budget for DOH regulatory services (1) With greater cost recovery from the DOH’s regulatory services, there is scope for reallocating resources away from regulatory bureaus of the department. üSustainable revenue generation of regulatory agencies depends on their credibility to set standards, verify/ enforce compliance. üFor this to happen, critical investments to build capability in these agencies needed.

Budget for DOH regulatory services (2)

Alternative HSEF scenarios Health budget ceiling pegged at 2006 levels Case 1 a. ØReallocation from hospitals and regulatory bureaus equal to 5% of MOOE in 2007 and 10% MOOE in 2008 -2010 Ø Order of priority – FAPs then public health Øno additional allocation for premium subsidies for health insurance of indigents

Alternative HSEF Scenarios (2)

Alternative HSEF Scenarios (3) Budget ceiling pegged at 2006 levels Case 1 b. ØReallocation from hospitals and regulatory bureaus equal to 5% of MOOE in 2007 and 10% MOOE in 2008 -2010 ØOrder of priority – public health then FAPs Øno additional allocation for premium subsidies for health insurance of indigents

Alternative HSEF Scenarios (4)

Alternative HSEF Scenarios (5) Budget allowed to grow Case 2 a: Ø Reallocation from retained hospitals equal to 5% of MOOE in 2007 and 10% of MOOE in 2008 -2010 Ø full coverage for FAPs Ø increased support for public health so as to reduce gap initially by 50% in 2007, 65% in 2008 and 100% in 20092010 Ø increased support for subsidies to indigent premium from 25% of gap in 2008; 50% of gap in 2009 -2010.

Alternative HSEF Scenarios (6)

Alternative HSEF Scenarios (7) Case 2 b: ØReallocation from retained hospitals equal to 5% of MOOE in 2007 and 10% of MOOE in 2008 -2010 Øfull coverage for FAPs Øincreased support for public health so as to reduce gap by 100% in 2007 -2010 Ø increased support for subsidies to indigent premium initially from 50% of gap in 2008 and by 100% of gap in 2009 -2010.

Alternative HSEF Scenarios (8)

Last words… There is a resource gap! We need to enhance capacity of hospitals to capture a larger share of the market and acquire a lion’s share of PHIC reimbursements but without compromising access to care by the disadvantaged We need to enhance capacity of regulatory agencies to improve services We need to have financial reforms through the HSEF and other PPAs