Health financing

Situation analysis

The Mozambique National Health Service is financed by public and external funds. About half of the recurrent expenditure is financed by external funds. Including investment, the share covered by the international community surpasses 60% . State budget and donors financed the health sector to an estimated US$ 9 per capita in 2002. To this, the contribution of private users should be added. Total health expenditure per capita increased from US$ 4.6 in 1997 to US$ 7.5 in 20001 and it was estimated to reach US$ 12.3 in 2004 . Cost recovery accounts for around 1% of the health budget .

The mechanisms for budgeting and allocation follow the main policy documents namely the Poverty Reduction Action Plan (PARPA II) , Health Sector Strategic Plan , and the Medium Term Expenditure Framework with the goal to increase the accessibility to health services while improving the quality of care in the primary health care provision. Major development partners provide their support to health sector through different funding mechanisms: direct budget support, common fund and bilateral or vertical funding of projects.

The health component of PARPA II states that the access for the whole population to health services contributes directly and in the short-term to improving the welfare, while also playing a role in the redistribution of income and wealth. It also contributes to the creation and preservation of human capital. The health component focuses on specific strategies targeting the poor and vulnerable groups as they face barriers (financial and non financial) in accessing and using the health services.

Table below shows the important increase in the overall resources envelop for the health sector, foreseen in the Medium Term Expenditure Framework (MTEF)6 for the period 2007-2010, as well as their respective percentages relatively to the total state budget. The increase between 2007 and 2008 is particularly noteworthy (+25%).

Budget projections are still conservative since the external component tends to increase continuously to levels above the ones presented below. The table below shows the estimated budget for the health sector for 2007-2010 (in US$ million) and respective percentages relative to the total state budget (MTEF, 2007).

User fees currently exist for most health services, and while exemption mechanisms exist (for some vulnerable groups and for specific illnesses) they are not well understood by the majority of health sector clients. Historically, the governing party has been strongly in favour of free basic health services, and only introduced user fees for health (and education) in the 1980s.

User fees for primary education were abolished in 2005 and a recent study was conducted to evaluate the impact of abolishing user fess for primary health care following the recommendations of the UN Report of the Special Rapporteur on the Right to Health which stated that "there was a need to clarify the role of user fees in the Mozambican health sector from the point of view of impeding access to the poor."

Challenges

WHO/Evelyn Hockstein

In the context of growing initiatives for vertical funding to the health sector the challenge is for the sector to sustain increased allocations from the state budget while exploring other financing mechanisms such as prepayment schemes and social health insurance.

Achievements

• Setting up of a Common Fund (PROSAUDE) under the Sector-Wide Approach (SWAp) coordination mechanism, through which all the partners can channel their funding to support the health sector. This mechanism is ruled by a Code of Conduct.
• Formulation of two documents that provide valuable information on sources/level of funding for the sector and reveals a real picture on the expenditure pattern across the different levels of the National Health Service.
• Public Expenditure Review, in 1997
• Expenditure Tracking Delivery Survey, in 2003.

Next steps

The government committed itself to produce a comprehensive health financing policy and strategy.

There are indications that there will be changes to the current health financing arrangements in Mozambique, such as all services related to the prevention and treatment of AIDS, tuberculosis and malaria being provided for free .

A National Health Accounts exercise will be conducted in 2008 to provide a clear assessment and indication on how resources are being targeted within the sector.

Costing exercises for the Millennium Development Goals 4, 5 and 6 are planned, aimed at providing robust data for the Medium Term Expenditure Framework 2010-2012 as well as identifying funding gaps within the sector.