Analyzing the Financial Sustainability of User Fee Removal Policies: A Rapid First Assessment Methodology with a Practical Application for Burkina Faso

Abstract

The purpose of this paper is to briefly present a methodological framework that does not require cumbersome investigations for a first assessment of the financial sustainability of policies aiming to remove or reduce healthcare user fees (the so-called free healthcare policy [FHCP]). This paper is organized in two main sections. The first analyzes the various possibilities available to finance an FHCP. Using several scenarios, it includes a special focus devoted to the calculus of what to consider when assessing the sustainability of expanding fiscal space for financing the FHCP. The second section relies on the current FHCP being implemented in Burkina Faso to illustrate a selection of specific issues raised in the methodological framework. The results suggest that sustainable FHCP financing is not outside the range of the government but does represent a significant challenge, as it will require, both currently and in the future, complex and delicate budget trade-offs at the highest governmental levels, regardless of other policy options to be considered.

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Fig. 1
Fig. 2

Sources of the data: Ministry of Health database, Burkina-Faso, 2018

Notes

  1. 1.

    How much will it cost? Where will the resources come from? What is the most appropriate scheme to make them available to stakeholders?

  2. 2.

    Notably, the aid directly dedicated to health is a much higher proportion of health expenditures in some countries. For example, in 2015, it accounted for 80% in Mozambique, approximately 57% in the Central African Republic and Burundi, and 40–50% in Congo, Ethiopia, Eritrea, Guinea, Guinea Bissau, Malawi, and Tanzania [23]. In some countries, user fee policies are largely donor driven.

  3. 3.

    For example, Ghana imposed an additional 2.5% value-added tax (VAT) that goes specifically to fund the National Health Insurance Scheme (NHIS) (it has expanded its fiscal space), but the government could have assigned it to another sector, such as education.

  4. 4.

    We do not address here the numerous issues that potentially arise from increasing tax revenues, aid, or public spending on health, with or without an increase in total public spending. Examples include issues of tax distortions and optimal taxation, taxation and growth, the effects of crowding out the private sector or not, changes in the relative price structure, differentiated evolutions in sectoral productivity (Baumol effects), and the effects of increased aid on growth. These issues are essential in the problematic expanding of fiscal space. They are highly debated, are often context dependent, and cannot be reduced to a handful of simple conclusions. However, they must be carefully considered because they can generate “negative” effects that will more than offset the expected health benefits of an expansion of fiscal space.

  5. 5.

    We assumed that there are no capital expenditures and no inflation (which does not alter the analysis).

  6. 6.

    Channeled through the treasury, from an extra-budgetary account, or going directly to an implementing entity such as a health center or NGO.

  7. 7.

    That is, currently $US686.

  8. 8.

    Burkina Faso is one of the few countries in sub-Saharan Africa to have been approaching the so-called Abuja indicator for several years.

  9. 9.

    First, for those aged < 5 years and pregnant women and, in 2010, for the entire population.

  10. 10.

    Delays in providing the MoF and donors with the information required for aid disbursement; cumbersome procedures for verifying the information provided by health facilities; slowness in the process of making funds available to health facilities (a matter of public financial management).

  11. 11.

    Presented at the workshop on free healthcare policy, Ouagadougou, 26 July 2017.

  12. 12.

    Consolidated operations of the central government are from the IMF, 2017 [32].

  13. 13.

    This would bring the share of PHE closer to the 15% Abuja “target.” However, despite its popularity, one must be very careful in interpreting this indicator, which is not intended to provide information on the sustainability or unsustainability of such a level of spending.

  14. 14.

    In nominal value; however, inflation will remain stable at 2%.

  15. 15.

    Mainly debt service and the civil servants' wage bill.

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Acknowledgements

This article is based on a research report that was prepared and funded by the Health Care Financing in Sub-Saharan African Collaborative Research Program of the African Economic Research Consortium (AERC; http://www.aercafrica.org) with the support of the FERDI (Fondation pour les Etudes et Recherches sur le Développement International). The authors thank two anonymous referees and the participants of the AERC’s Final Review Workshop (31 May–1 June 2018) and two anonymous referees from this journal for their comments and suggestions. However, the authors are solely responsible for the analyses presented in this article.

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JM is the main author for the development of the methodology and the writing of the article. Each co-author contributed to the drafting of the paper and to the reflections and analyses presented therein.

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Correspondence to Jacky Mathonnat.

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Jacky Mathonnat, Martine Audibert, and Salam Belem have no conflicts of interest that are directly relevant to the content of this review/study.

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Mathonnat, J., Audibert, M. & Belem, S. Analyzing the Financial Sustainability of User Fee Removal Policies: A Rapid First Assessment Methodology with a Practical Application for Burkina Faso. Appl Health Econ Health Policy (2019). https://doi.org/10.1007/s40258-019-00506-2

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