government size, HIV prevalence, debt relief

Government spending on health from domestic sources is an important indicator of a government's commitment to the health of its people, and is essential for the sustainability of health programmes. The study aimed to systematically analyse all data sources available for government spending on health in developing countries; describe trends in public financing of health; and test the extent to which they were related to changes in gross domestic product (GDP), government size, HIV prevalence, debt relief, and development assistance for health to governmental and non-governmental sectors. The authors did a systematic analysis of all data sources available for government expenditures on health as agent (GHE-A) in developing countries, including government reports and databases from WHO and the International Monetary Fund (IMF). GHE-A consists of domestically and externally financed public health expenditures. They assessed the quality of these sources and used multiple imputation to generate a complete sequence of GHE-A. With these data and those for development assistance for health to governments, the authors estimated government spending on health from domestic sources. They used panel-regression methods to estimate the association between government domestic spending on health and GDP, government size, HIV prevalence, debt relief, and development assistance for health disbursed to governmental and non-governmental sectors. The authors tested the robustness of our conclusions using various models and subsets of countries. In all developing countries, public financing of health in constant US$ from domestic sources increased by nearly 100% (IMF 120%; WHO 88%) from 1995 to 2006. Overall, this increase was the product of rising GDP, slight decreases in the share of GDP spent by government, and increases in the share of government spending on health. At the country level, while shares of government expenditures to health increased in many regions, they decreased in many sub-Saharan African countries. The statistical analysis showed that development assistance for health to government had a negative and significant effect on domestic government spending on health such that for every US$1 of development assistance for health to government, government health expenditures from domestic resources were reduced by $0.43 (p=0) to $1.14 (p=0). However, development assistance for health to the non-governmental sector had a positive and significant effect on domestic government health spending. Both results were robust to multiple specifications and subset analyses. Other factors, such as debt relief, had no detectable effect on domestic government health spending. To address the negative effect of development assistance for health on domestic government health spending, Lu and colleagues recommend strong standardised monitoring of government health expenditures and government spending in other health-related sectors; establishment of collaborative targets to maintain or increase the share of government expenditures going to health; investment in the capacity of developing countries to effectively receive and use development assistance for health; careful assessment of the risks and benefits of expanded development assistance for health to non-governmental sectors; and investigation of the use of global price subsidies or product transfers as mechanisms for development assistance for health.

‘Fungibility’ of foreign aid occurs when aid substitutes for government spending, resulting in ‘sub-additionality’ rather ‘additionality’, the goal of most development assistance. Among the factors that are complicating discussions of its extent, and what to do about it, are incomplete estimates of development assistance for health (DAH) in the first place (‘untraceable DAH’), variations in accounting practices at country level for total health expenditures, and lack of information about what the resources taken from ministries of health actually are spent on. Although African leaders pledged in 2001 in Abuja to devote 15% or more of their yearly budgets to the health sector and absolute amounts of domestic funding being spent on health have increased 132-242% between 1995 and 2006 in low-income countries in sub-Saharan Africa, the largest reductions in the proportion that domestic funding contributes to health spending occurred in countries with the largest HIV epidemics and the largest DAH contributions. It is not surprising that increasing domestic contributions are overshadowed by external support as countries try to turn around HIV epidemics that are sapping development. Although investment in effective public expenditure management systems is clearly needed to improve accountability from the global level right through to local level, it is important to remember that country ownership starts with nationally set priorities and reallocation of funding to match these.