## IMF Engagement on Health Spending Issues in Surveillance and Program Work (tnmea2023008)

## Source details

**Canonical URL:** [IMF Engagement on Health Spending Issues in Surveillance and Program Work (tnmea2023008)](https://www.imf.org/-/media/files/publications/tnm/2023/english/tnmea2023008.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/tnm/2023/english/tnmea2023008.pdf.md)
- [Structured JSON version](/-/media/files/publications/tnm/2023/english/tnmea2023008.pdf.json)

---

### Executive summary: scope, objectives, and IMF engagement
- Key messages:
  - IMF country teams have become increasingly engaged on health spending issues in surveillance and program work, particularly since the COVID-19 pandemic.
  - Primary objectives of health spending: improve health outcomes and protect households against high financial costs of health care.
  - Health spending is often one of the largest single public expenditures and matters for both development and fiscal policy.
  - IMF engagement is guided by assessment of macro-criticality and collaboration with development partners with sectoral expertise.
- Macro-criticality assessed through three channels:
  - Spending adequacy: capacity to provide an essential basket of quality health services and protect households from major financial distress.
  - Fiscal sustainability: ability to finance health expenditure over the medium to long term without undermining macroeconomic stability or crowding out other critical expenditures.
  - Spending efficiency: ability to deliver national health objectives cost-effectively, avoiding waste and distortions.
- Trade-offs highlighted:
  - Increasing coverage can improve adequacy but undermine sustainability if financing is lacking.
  - Copayments can reduce overconsumption and improve efficiency but may harm adequacy for low-income households.
- IMF engagement modalities:
  - Surveillance: engage when macro-critical health spending issues affect or could affect external or domestic stability.
  - Program work: focus on role of health spending in achieving program objectives or monitoring implementation; conditionality considered where reforms are critical.
  - Policy responses span macro-level (system-wide), micro-level (incentives/governance), and service-related reforms.
- Collaboration:
  - Staff engagement benefits from leveraging specialized external knowledge and resources (World Bank, WHO, UNICEF, others).

### Health systems objectives, links to economic outcomes, and macro-criticality
- Health system objectives:
  - Deliver quality essential health services equitably (access, coverage, delivery).
  - Financially protect people from excessively high health expenditures (insurance, subsidies).
  - Be responsive to service delivery expectations (choice, respect, prompt attention).
- Health–economy links and empirical findings:
  - Good health contributes to economic development via lower mortality and infections; better health associated with better education, higher labor participation, higher wages.
  - Specific program associations: deworming (Kenya), iron supplementation (Indonesia), iodine supplementation (Tanzania), hookworm/malaria interactions (the Americas).
  - Household survey analysis for 89 countries: in the poorest welfare quintile, child mortality and share of women reporting problems accessing health care due to lack of money are nearly double those for the richest quintile.
  - Infectious diseases evidence:
    - Between 1965 and 1990, countries with high malaria transmission experienced average per capita GDP annual growth of 0.4 percent, while in other countries average growth was 2.3 percent after controlling for other determinants.
    - Dixon, McDonald, and Roberts (2001): growth rates reduced by HIV/AIDS in Africa on average by 2 to 4 percent between the 1960s and 1990s.
    - Communicable diseases were still responsible for more than 40 percent of deaths in low-income and developing countries in 2019.
  - Noncommunicable diseases (NCDs):
    - NCDs account for the largest share of mortality across income groups and have surpassed communicable diseases in low-income and developing countries in the past decade.
    - In the European Union, premature deaths from NCDs are estimated to amount to a 0.8 percent of GDP loss per year.
    - Chronic nature of NCDs results in prolonged health care costs, loss of productivity, and enduring economic burden.
- Macro-criticality assessment guidance:
  - Integrate evaluations across adequacy, efficiency, and sustainability; use streamlined indicators when appropriate.
  - Recognize trade-offs and country-specific context (development level, fiscal space, sector capability).

### Health spending composition, financing, and risks
- Composition and cross-country patterns:
  - Curative care (inpatient and outpatient): on average more than half of health expenditure.
  - Medical goods: nearly 20 percent of health expenditure.
  - Advanced economies allocate higher share to long-term care (14 percent).
  - Low-income and developing economies allocate on average 15 percent to preventative care and 12 percent to governance.
- Total health spending by income group (2020, percent of GDP):
  - Advanced economies: 10.0
  - Emerging market economies: 6.9
  - Low-income developing countries (LIDCs): 5.6
- Financing actors: governments, businesses, households, donors.
- Financing arrangements and risks:
  - Examples: In Bangladesh, Cameroon, and Nigeria, out-of-pocket expenses make up more than 60 percent of health expenditure.
  - Overreliance on out-of-pocket financing can limit access for poor households and fragment schemes.
- Economic rationales for government intervention:
  - Externalities (individual choices affect population health).
  - Asymmetric information, moral hazard, adverse selection.
  - Production of public goods and distributional goals.
- Risks of government intervention:
  - Limited information, limited incentives for efficiency and innovation without market disciplines.

### Key health system dimensions and financing schemes
- Four interrelated dimensions:
  - Governance: policy frameworks, oversight, regulation, accountability.
  - Financing: revenue raising, pooling, purchasing; sources include general government revenue, social insurance levies, premiums, out-of-pocket, donor financing.
  - Resources: human and physical (doctors, nurses, medicines, infrastructure).
  - Delivery: primary care, specialized care, public health initiatives.
- Country examples of scheme mixes:
  - United States: mix including Veteran’s Affairs, Medicare, Medicaid, mandated/voluntary insurance.
  - Australia: large public health system (funded through Medicare) plus voluntary insurance above basic cover.
- Financing scheme averages (2020): source presents unweighted averages by country group and notes emerging market economies: about half have predominant public/social health insurance financing; LIDCs rely heavily on voluntary financing schemes.

### Coverage, financial protection, and adequacy benchmarks (BOX 5)
- Coverage and financial protection:
  - SDG indicator 3.8.1 monitors coverage of essential services across reproductive, maternal, newborn and child health; infectious diseases; NCDs; service capacity and access.
  - SDG indicator 3.8.2 monitors financial protection (proportion with large health expenditures relative to consumption/income).
  - SDG3 financial risk protection: nearly 13 percent of the world’s population had out-of-pocket expenditures exceeding 10 percent of the household budget.
- Per capita spending thresholds cited:
  - $79 per capita (10 percent of 2015 gross national income) annual cost of an essential benefits package in low-income countries (Watkins and others 2020).
  - $130 per capita (6 percent of gross national income) annual cost in lower-middle-income countries (Watkins and others 2020).
- Estimated increases in health spending required to expand access to UHC (Moses and others 2018):
  - 4 percentage points of GDP in low-income countries.
  - 2.2 percentage points of GDP in lower-middle-income countries.
  - 0.9 percentage points of GDP in upper-middle-income countries.
  - 0.4 percentage points of GDP in high-income countries.
- Gaspar and others (2019) methodology—estimated additional health spending needed in 2030:
  - 3.9 percentage points in LIDCs.
  - nearly 3.1 percentage points in emerging market economies.
- Adequacy assessment indicators:
  - UHC service coverage index (indicator 3.8.1) closely associated with life expectancy; widespread coverage in advanced economies, many EMEs and LIDCs rank low.
  - Input indicators: doctors and nurses per capita, hospital beds.
  - Example: doctors and nurses per 10,000 people vary from 40 doctors and 110 nurses in advanced economies to around 4 doctors and 15 nurses in LIDCs.
  - High maternal and infant mortality rates may signal inadequate spending.

### Fiscal sustainability, drivers of health expenditure, and policy options
- Fiscal sustainability definition:
  - Health spending sustainable if level and growth can be financed without undermining government debt sustainability or crowding out other priorities.
  - Assess within medium-term fiscal frameworks, accounting for other priorities and revenue capacity.
  - Governments often implicit financiers of last resort—private or donor financing fiscal risks matter.
- Drivers of health expenditure:
  - Population aging.
  - Excess cost pressures (new technologies, wages, pharmaceutical prices).
  - Income levels (higher income → higher demand and spending).
  - Scope of coverage and degree of subsidization.
  - Input levels (doctors, nurses, beds).
  - Institutional and administrative capacity.
- Historical patterns:
  - Advanced economies and many EMEs: health expenditure has grown faster than GDP due to aging, excess cost growth, technological change.
  - Some EMEs and most LIDCs: pressures derive from need to expand coverage for rising populations.
- Policy options to accommodate rising spending while safeguarding fiscal sustainability:
  - Reprioritizing spending.
  - Enhancing spending efficiency.
  - Increasing revenue capacity and external financing.
  - Enhancing management of public financing processes.
- Specific recommendations:
  - Build capacity for long-term projections of health expenditure and include them in medium-term fiscal frameworks.
  - Adopt a clear medium-term revenue strategy.
  - Use whole-of-budget perspective; efficiency gains in other sectors may be needed.
  - Revenue mobilization: more than half of LIDCs and a third of EMEs have tax-to-GDP ratios below 15 percent.
  - In many LIDCs, taxation of tobacco, sugary beverages, and alcohol may be administratively feasible with high marginal social value.
  - Effective and flexible public financial management supports budgeting, execution, and emergency response.
  - Donor funding: in low-income and developing economies, about a quarter of health spending is financed from donors; Burkina Faso, Ghana, and Senegal external sources financed 11 to 18 percent of health spending in 2019.
  - Donor funds are best used for emergency responses given volatility and limited suitability for recurrent spending.

### Spending efficiency: concepts, evidence, and levers
- Efficiency definition:
  - Health spending efficient when it delivers intended outcomes cost-effectively and without unintended economic distortions.
- Sources of inefficiency:
  - Poor governance, weak management, low capacity, market failures.
- Macro-level analysis:
  - Compare countries at similar development levels and health risk profiles.
  - Health frontier approach: compare outputs to highest performing country at a given level of inputs.
    - Estimated spending efficiency losses relative to respective frontiers:
      - 3 percent of health spending for advanced economies.
      - 8 to 12 percent for developing economies.
    - Input-based efficiency savings estimates (Garcia-Escribano, Juarros, and Mogues 2022):
      - 1.2 percentage points of GDP in advanced economies.
      - 1.4 percentage points of GDP in emerging market economies.
      - 1.0 percent of GDP in LIDCs.
- Micro-level levers:
  - Rebalance composition (more primary, community, preventative care to reduce hospital admissions and adverse incidents).
  - Pharmaceutical reforms: generics, procurement, tendering.
  - Hospital integration and gatekeeping to reduce avoidable admissions.
  - Administrative capacity improvements (employment mix, calibrated devolution).
- Empirical efficiency scores (output-oriented, 2017 averages by income group shown in source):
  - Example values in source: 0.968 (advanced economies), 0.925 (emerging market economies), 0.888 (LIDCs).

### Illustrative country and policy experiences
- Tanzania (2000s):
  - Expanded access via primary health care strengthening, devolved responsibilities, results-based approaches, weighted capitation budgeting; improvements in training and service quality but coverage remains low and inequities persist.
- Thailand (early 2000s onward):
  - Universal Coverage Scheme expanded access; in the decade after scheme initiation:
    - Life expectancy at birth rose from 72 to 74 years.
    - Out-of-pocket spending declined.
    - Fewer households incurred catastrophic spending.
- Netherlands (integration of primary care and emergency departments; see BOX 7):
  - Integrated primary care in some regions into hospital emergency departments using triage-dependent pathways—outcomes include increased patient satisfaction and reduced self-referrals.
  - Norway: larger primary care centers acting as intermediate care facilities delivering nonurgent, postacute, rehabilitation, and nursing care to reduce unnecessary admissions and contain hospital costs.
- Payments to providers (BOX 10): common payment structures and trade-offs
  - Fee for service: transparent, reduces provider financial risk, may encourage greater clinical activity and higher costs.
  - Diagnostic-related groups: activity-based per patient, encourage efficiency but can shift focus to profitable activities and raise transaction costs.
  - Capitation: lump sum per enrolled patient, encourages cost containment, risks under-provision; lower transaction costs.
  - Global budgets: fixed annual budgets, incentivize cost containment, risk of rationing and less transparency.
  - Wages/salaries: administrative pay, limited financial incentives for quality.
  - Pay for performance: payments based on performance objectives, can improve outcomes but has high transaction and measurement costs.
  - Blended payments: combine incentives to balance trade-offs.

### IMF experience in surveillance and program contexts (BOX 11 and Box 12)
- Surveillance country examples and advice:
  - Mexico (2019/2021):
    - Fragmented system; administrative costs almost 10 percent of total health spending; health spending growing but below other EMEs.
    - Staff advice: increase health spending by about 1 to 1.5 percent of GDP by 2030 to make progress on SDG3; target rural/impoverished areas; reduce administrative and insurance costs; improve portability and information infrastructure.
  - Thailand (2016):
    - Achieved universal coverage but fragmented schemes and aging pressures; public expenditure expected to increase.
    - Staff advice: comprehensive review of schemes, long-term cost projections, central monitoring unit in Ministry of Finance, reduce fee-for-service, increase capitation and closed budgets, review contributions and consider VAT increase.
  - Japan (2018):
    - Aging pushes up social security spending; without reforms public spending on medical and long-term care projected to double to about 20 percent of GDP by 2050.
    - Staff advice: contain total spending focusing on efficiency, increase out-of-pocket spending while safeguarding low-income households, strengthen gatekeeper function of primary physicians, greater use of generic drugs, eliminate nonessential services; combined reforms could generate fiscal savings of up to 2 percent of GDP by 2030.
  - The Netherlands (2018, 2021):
    - Rapid aging; 2006 reform moved to competitive insurer system; efficiency improvements but limited competitiveness.
    - Staff advice: quantify externalities of structural changes, monitor insurer–provider bargaining power, regulatory vigilance, use fiscal buffers during COVID-19 to support health sector.
- Program context, conditionality, and examples:
  - Conditionality considerations: authorities’ ownership, administrative capacity, coordination with other multilateral institutions.
  - Forms of conditionality:
    - Quantitative conditions (QPCs, ITs): explicit health conditionality is unusual; exceptions noted in postpandemic programs.
    - Structural benchmarks (SBs): used to promote reforms improving coverage and efficiency (examples: Ecuador 2019 EFF; Ghana 2015 ECF).
    - Prior actions: possible where applicable.
  - Evidence and practice:
    - Quantitative conditions on health spending rare; social spending floors widely used and often include health.
    - Structural public financial management conditionality can boost long-term health expenditures.
    - IMF engagement on health issues increased after COVID-19; Resilience and Sustainability Trust likely to expand engagement on long-term financing of pandemic preparedness.
- Program country examples:
  - Greece (2010 SBA and 2012 EFF):
    - Reforms included budget caps, pricing mechanisms, promotion of gatekeeping, e-prescriptions, generic drugs, creation of EOPYY; public health expenditure curbed by nearly 2 percentage points (from 6½ percent of GDP in 2010 to 4¾ percent of GDP in 2018) but unmet demands emerged among low-income households.
  - Ecuador (2019 and 2020 EFF):
    - 2020 disbursement: $4.6 billion (4.3 percent of GDP) under EFF and Rapid Financing Instrument; pandemic-related spending increased by $1 billion in 2021 largely for health (including vaccines).
    - Actions: procurement reforms, reference prices for medicines/equipment, medical audits of pensioners’ claims; SB on action plan for primary education and health spending published but not implemented under 2019 EFF.
  - Madagascar (2016 ECF):
    - Indicative target on social spending covering health; SB on integration of health and education spending plans within medium-term budget framework met.
  - Ghana (2015 ECF):
    - Social spending indicative target covering selected health and social safety nets; SB on strengthening human resource management implemented (payroll and HR systems integration); IMF–World Bank collaboration on social spending and National Health Insurance Scheme.

### Pandemic preparedness, economic costs, and strategic lessons (Annex 3)
- COVID-19 macroeconomic and human impact (as of early 2023):
  - 759 million reported cases of COVID-19.
  - Excess mortality of more than 14.9 million people.
  - More than 6.8 million reported deaths.
  - Largest drop in global GDP (of over 3 percent) and largest rise in public debt (of more than 9 percent of GDP or more) in more than half a century.
  - Global economic losses described as being in the trillions.
- Preparedness capacity and gaps:
  - Only 15 percent of countries have an average health security summary (Joint External Evaluations) score of more than 80.
  - Nearly one-third of countries have a Joint External Evaluations score of 40 or less.
  - Capacities must be deployable in an emergency.
- Pandemic toolkit dimensions:
  - Global instruments: coordinate multilateral/regional support, set standards, mobilize resources.
  - National frameworks: prevention, detection, and response across public/private institutions; reliable budget and public financial management, legal frameworks, credible resourced plans, stress-tested capabilities.
  - Health system strengthening: testing/tracking capacity, public health function, system capacity to manage outbreaks and build resilience.
- Costs and financing principles:
  - Pandemic preparedness costs estimated as low as 1 percent of health budgets for LIDCs plus $15 billion per annum from international financing (G20 High Level Independent Panel 2021).
  - Preparedness requires long-term resourcing that supports national ownership and yields multiple medium-term benefits.
- Strategic lessons and recommendations:
  - Early identification and management of outbreaks is essential; global health vulnerable to weak country preparedness.
  - Capacities must be deployable in emergencies.
  - From Agarwal and others (2022), needs include:
    - (1) achieve equitable access beyond vaccines to a comprehensive toolkit;
    - (2) monitor virus evolution and dynamically upgrade toolkit;
    - (3) transition from acute response to sustainable strategy toward COVID-19 integrated with other priorities;
    - (4) create unified risk-mitigation approach to future infectious disease threats.
  - National and global coordination required for surveillance, standards, resource mobilization, and legally and financially enabled response capacities.

*IMF staff content from tnmea2023008.*

### Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

### Executive Summary

### Key messages
- IMF country teams have become increasingly engaged on health spending issues in surveillance and program work, particularly since the COVID-19 pandemic.
- The primary objectives of health spending are to improve health outcomes and provide protection to households against high financial costs of health care.
- Health spending is often one of the largest single public expenditures and is important from both development and fiscal perspectives.
- IMF engagement on health spending issues is guided by an assessment of its macro-criticality and by collaboration with development partners with sectoral expertise.

### Macro-criticality: the three channels
- Macro-criticality of health spending can arise through three channels:
  - spending adequacy: capacity to provide a basket of essential quality health services consistent with a country’s health and economic objectives while protecting households from major financial distress.
  - fiscal sustainability: a country’s ability to finance health expenditure over the medium to long term without undermining macroeconomic stability or crowding out other critical expenditures.
  - spending efficiency: the ability to deliver national health objectives in a cost-effective way, avoiding waste and leakages and without imposing undue economic distortions (for example, on labor supply).
- Important trade-offs exist across the channels. Examples from the note:
  - Increasing coverage can improve adequacy but undermine sustainability if financing is not available.
  - Copayments can reduce overconsumption and improve efficiency but may harm adequacy if low-income households are prevented from accessing care.

### Objectives and features of health systems
- Strong health systems typically fulfil three main objectives (WHO 2000; Franken and Koolman 2013):
  - Delivering quality essential health services to improve health outcomes equitably (includes access, coverage, and delivery; OECD/Eurostat/WHO 2017).
  - Financially protecting people from excessively high health expenditures (for example, through health insurance or subsidized health services).
  - Being responsive to service delivery expectations (choice, respect, access to support networks, prompt attention).
- Health outcomes and economic performance have a two-way relationship: countries with higher GDP per capita tend to have longer life expectancy; improvements in health enhance human capital and productivity, while higher incomes enable investments that improve health.
- The COVID-19 pandemic highlighted links between health and macroeconomic outcomes and increased focus on pandemic preparedness and surge-capacity responses.

### Implications for IMF engagement and staff guidance
- Staff engagement should be guided by the assessed macro-criticality and tailored to country context (level of development, fiscal space, health sector capability).
- The scope of engagement differs by context:
  - Surveillance: engage when macro-critical health spending issues affect or could affect external or domestic stability.
  - Program work: focus on the role of health spending issues in achieving program objectives or monitoring program implementation; consider conditionality where reforms are critical to program objectives or monitoring implementation.
- Policy responses and reform design span three broad categories:
  - Macro-level policy reforms targeting system-wide features (for example, health spending levels).
  - Micro-level reforms addressing incentives and governance (for example, budget caps).
  - Service-related reforms covering scope of health services, public and private provision, and human resource management.
- Staff engagement benefits from leveraging specialized external knowledge and resources. Collaboration with the World Bank, WHO, UNICEF, and other partners is critical for design and implementation of macro-critical health reforms and for identifying micro-level actions.

### Purpose and structure of the note
- The note provides tools for staff to:
  - understand the channels through which health spending may become macro-critical;
  - assess the importance of those channels and their trade-offs; and
  - identify appropriate policy responses and trade-offs involved.
- The note supports integration of health spending analysis into surveillance and program activities and points to additional support and data resources (Annex 1) and examples of reforms (Annex 2).

*IMF Engagement on Health Spending Issues in Surveillance and Program Work — Executive Summary*

### BOX 2. Health and Economic Outcomes

### BOX 2. Health and Economic Outcomes

### Health and economic links: empirical findings
- Good health has intrinsic value and contributes to economic development through lower mortality and infection rates.
- Better health outcomes are associated with better education outcomes, higher labor force participation, and higher wages (IMF 2017a; Weil 2014).
- Specific nutrition and health program examples associated with better economic outcomes:
  - Deworming associated with school attendance and subsequent earnings (Kenya).
  - Iron supplementation associated with labor market outcomes (Indonesia).
  - Iodine supplementation associated with cognitive function (Tanzania).
  - Hookworm associated with malaria eradication and school attendance and labor earnings (the Americas).
- Analysis of household survey data for 89 countries indicates that, in the poorest welfare quintile, child mortality and the share of women reporting problems accessing health care as a result of lack of money are nearly double those for the richest quintile.
- Infectious diseases:
  - Between 1965 and 1990, countries with high transmission of malaria experienced an average per capita GDP annual growth of 0.4 percent, while average growth in other countries was 2.3 percent after controlling for other determinants of growth.
  - Dixon, McDonald, and Roberts (2001) find that growth rates were reduced by HIV/AIDS in Africa on average by 2 to 4 percent between the 1960s and 1990s.
  - Although the share of deaths attributable to infectious and other communicable diseases has decreased over the past decades, these were still responsible for more than 40 percent of deaths in low-income and developing countries in 2019.
- Noncommunicable diseases (NCDs):
  - NCDs account for the largest share of mortality across income groups and have surpassed communicable diseases in low-income and developing countries in the past decade.
  - In the European Union, premature deaths from noncommunicable diseases are estimated to amount to a 0.8 percent of GDP loss per year (OECD and European Commission 2016).
  - The chronic and long-lasting nature of NCDs often results in prolonged health care costs, loss of productivity, financial burden, and enduring economic burden.

### Health spending composition and cross-country patterns
- Across countries, curative care (inpatient and outpatient services) and medical goods make up on average more than half and nearly 20 percent of health expenditure, respectively.
- Advanced economies tend to allocate a higher proportion of total health spending to long-term care (14 percent).
- Low-income and developing economies tend to spend on average a higher proportion on preventative care (15 percent) and governance (12 percent).
- Total health spending by income group (2020, percent of GDP):
  - Advanced economies: 10.0
  - Emerging market economies: 6.9
  - Low-income developing countries (LIDCs): 5.6
- In advanced economies, government financing usually plays a predominant role compared with countries with other economies.
- Financing actors: governments, businesses, households, and donors all typically contribute to health financing.

### Financing arrangements and risks
- Country examples of financing patterns:
  - In Bangladesh, Cameroon, and Nigeria, out-of-pocket expenses make up more than 60 percent of health expenditure (WHO 2022).
- Overreliance on out-of-pocket financing can:
  - Limit access to care for poor households.
  - Lead to fragmentation of schemes within a system, affecting alignment with national priorities and patient needs.
- Government roles:
  - Governance and regulatory responsibilities include oversight, regulation of insurance markets, occupational requirements, and public health functions.
  - Trade-offs in regulation: e.g., price regulation may keep costs down for current patients but reduce incentives for innovation that benefit future patients.

### Economic rationales for government intervention and associated risks
- Market-failure rationales for intervention:
  - Externalities: individual health choices influence population health (for example, individual immunization against infectious diseases).
  - Asymmetric information, moral hazard, and adverse selection: market-based insurance can lead to underinvestment in prevention, adverse selection, and overtreatment due to information asymmetries.
  - Production of public goods and distributional goals: public health functions may exhibit economies of scale and distributional concerns justify intervention.
- Risks and challenges of government intervention:
  - Limited information and difficulty matching services to consumers’ needs and preferences.
  - Limited incentives for efficiency and innovation in the absence of market disciplines.

### Key health systems dimensions and country models
- Four critical and interrelated dimensions characterizing health systems:
  - Governance: Strategic policy frameworks, oversight, coalition-building, regulation, system design, and accountability.
  - Financing: Flow of monetary resources including revenue raising, pooling, and purchasing; sources include general government revenue, social insurance levies, health insurance premiums, out-of-pocket expenditure, and donor financing.
  - Resources: Human and physical resources (doctors, nurses, essential medicines, infrastructure).
  - Delivery: Services delivered (primary care, specialized care, public health initiatives).
- Country models illustrate combinations across dimensions:
  - United States: government scheme (Veteran’s Affairs), social insurance (Medicare), public insurance (Medicaid), and mandated and voluntary insurance schemes.
  - Australia: large public health system (funded through Medicare) with significant voluntary health insurance above basic cover.

### Health care financing scheme averages (2020)
- Unweighted average financing scheme composition by country group (percent of health expenditure):
  - Advanced economies: social health insurance; voluntary financing arrangements; compulsory private health insurance/other financing (figure shows mixed shares).
  - Emerging market economies: about half have predominant public/social health insurance financing.
  - Low-income developing countries: rely heavily on voluntary financing schemes, including out-of-pocket expenditure and voluntary health insurance.
- Note: Specific numeric breakdowns by financing type in Figure 5 are presented in the source.

### Assessing macro-criticality of health spending
- Macro-criticality channels: spending adequacy, spending efficiency, and fiscal sustainability (IMF 2019).
- Macro-criticality can arise through one or a combination of these channels.
- Integrated assessment should evaluate the overall health system and outcomes; a streamlined assessment using key indicators may be appropriate depending on scope and data availability.
- Trade-offs exist across channels; for example, enhancing spending adequacy (to increase coverage) may conflict with safeguarding medium-term fiscal sustainability, especially in emerging and developing market economies.

### Spending adequacy: assessment focus
- Spending adequacy refers to whether health spending is sufficient to achieve a government’s social policy objectives, typically:
  - Providing an essential basket of quality health services.
  - Ensuring people do not fall into poverty because of health care expenditures.
- Adequacy assessment components include:
  - Evaluation of capacity of health spending to achieve access to quality services and goods.
  - Delivery of adequate health outcomes.
  - Protection of the vulnerable from financial or other hardships.
- Analysis of spending adequacy should start by assessing aggregate health spending using different indicators to indicate overall resources available to support coverage, input purchases, user costs, or quality.

*Source: BOX 2. Health and Economic Outcomes, from the provided IMF content unit.*

### BOX 5. Essential Health Services and Financial Protection

### BOX 5. Essential Health Services and Financial Protection

### Coverage and financial protection
- The World Health Organization considers access to essential health services and financial risk protection as keys to attain the Sustainable Development Goal that relates to health.
- Coverage of essential health services is monitored by Sustainable Development Goal indicator 3.8.1 and includes reproductive, maternal, newborn and child health; infectious diseases; noncommunicable diseases; and service capacity and access among the general and the disadvantaged population.
- Financial protection is monitored by Sustainable Development Goal indicator 3.8.2 and focuses on the proportion of the population with large expenditure on health in relationship to consumption or income.
- The SDG3 target for financial risk protection shows that nearly 13 percent of the world’s population had out-of-pocket expenditures exceeding 10 percent of the household budget (a measure of catastrophic expenditures).

### Benchmarks and estimated additional spending needed to attain SDG3
- Per capita spending thresholds cited in the literature:
  - $79 per capita (10 percent of 2015 gross national income) annual cost of a package of essential health benefits in low-income countries (Watkins and others 2020).
  - $130 per capita (6 percent of gross national income) annual cost in lower-middle-income countries (Watkins and others 2020).
- Estimated increases in health spending required to expand access to UHC (Moses and others 2018):
  - 4 percentage points of GDP in low-income countries.
  - 2.2 percentage points of GDP in lower-middle-income countries.
  - 0.9 percentage points of GDP in upper-middle-income countries.
  - 0.4 percentage points of GDP in high-income countries.
- Using Gaspar and others (2019) methodology, estimated additional health spending needed in 2030 to make progress along SDG3:
  - 3.9 percentage points in LIDCs.
  - nearly 3.1 percentage points in emerging market economies.
  - (Figure 6 in source shows means and maxima by country group for Advanced economies, Emerging market economies, Low-income developing countries.)

### Adequacy: UHC service coverage index and complementary indicators
- The UHC service coverage index (indicator 3.8.1) is a widely available marker for adequacy and is closely associated with health outcomes such as life expectancy.
- According to the UHC indicator, coverage of essential health services is widespread in advanced economies; many emerging market and developing countries rank low.
- Complementary input and output indicators for adequacy:
  - Input indicators: doctors and nurses per capita, hospital beds.
  - Output/outcome indicators: life expectancy, mortality rates, health-adjusted life expectancy (HALE).
- Example data points:
  - Number of doctors and nurses per 10,000 people varies from 40 doctors and 110 nurses in advanced economies to around 4 doctors and 15 nurses in LIDCs.
- High maternal and infant mortality rates may signal inadequate spending and limited access to specific health services and could warrant more granular analysis.

### Fiscal sustainability of health spending
- Definition: Health spending is sustainable if its level and growth over time can be financed without undermining government debt sustainability or crowding out other priority spending.
- Sustainability assessment should evaluate past, current, and planned spending within a medium-term fiscal framework that accounts for other spending priorities and revenue capacity.
- Fiscal risks related to private or donor health financing may need to be accounted for because governments are often implicit financiers of last resort.

### Drivers of health expenditure
- Key drivers decomposed into:
  - Population aging (increases in the proportion with higher health needs).
  - Excess cost pressures (cost of adopting newer technologies and treatments; underlying cost growth including wages and pharmaceutical prices).
  - Income levels (higher income tends to be associated with higher demand for health services and higher health expenditure).
- Other drivers:
  - Scope of coverage offered and the extent of government subsidization.
  - Level of inputs used to deliver services (doctors, nurses, hospital beds).
  - Institutional and administrative capacity to administer and control health budgets.
- Historical patterns:
  - Most advanced economies and many emerging market economies: health expenditure has grown faster than GDP driven by aging populations, excess cost growth, and technological change.
  - Some emerging market economies and most LIDCs: spending pressures largely derive from the need to expand coverage and provide services to a rising population.
- Projections and historical series in source (Figure 8) show public and compulsory health expenditure, 2000−50, by country group (AE, EME, LIDC).

### Policy options to accommodate rising health spending while safeguarding fiscal sustainability
- Policy assessments should be made in the context of credible medium-term fiscal frameworks and may include a combination of:
  - Reprioritizing spending.
  - Enhancing spending efficiency.
  - Increasing revenue capacity and external financing.
  - Enhancing management of public financing processes.
- Specific recommendations and considerations:
  - Build capacity to undertake long-term projections of health expenditure and include them in national medium-term fiscal frameworks.
  - A clear medium-term revenue strategy is a critical component of a medium-term fiscal framework.
  - Overall spending reprioritization and efficiency gains can enable expansion of health coverage; a whole-of-budget perspective may require efficiency gains in other sectors or rescaling other priorities.
  - Revenue mobilization is crucial; more than half of LIDCs and a third of emerging market economies have tax-to-GDP ratios below 15 percent, indicating scope to increase domestic revenue mobilization without impairing growth.
  - In many LIDCs, taxation of tobacco, sugary beverages, and alcohol may provide an administratively feasible revenue option with high marginal social value.
  - Effective and flexible public financial management systems support appropriate budgeting, budget execution, and emergency response capacity (examples include COVID-19 and Ebola responses).
  - Donor funding/official development assistance can create fiscal space for health spending where mobilizing national resources is challenging; in low-income and developing economies, about a quarter of health spending is financed from donors.
    - Example: In Burkina Faso, Ghana, and Senegal external sources financed 11 to 18 percent of health spending in 2019 and were critical in 2020.
    - Donor funds are best used for emergency responses given volatility and limited suitability for recurrent spending.

### Spending efficiency: concepts and evidence
- Definition: Health spending is efficient when it delivers intended health outcomes in a cost-effective manner and without unintended economic distortions.
- Inefficiencies may reflect:
  - Poor governance (poor transparency of resource distribution).
  - Weak system management (imbalances between primary and hospital care).
  - Low capacity (inappropriate case management and treatments).
  - Market failures (underinvestment in preventative care).
- Macro-level analysis approaches:
  - Compare countries at similar development levels and health risk profiles; high expenditure with poor outcomes may signal efficiency problems.
  - Health frontier approach compares country outputs to the highest performing country at a given level of inputs to indicate potential gains from improving efficiency.
    - Estimated spending efficiency losses relative to respective frontiers:
      - 3 percent of health spending for advanced economies.
      - 8 to 12 percent for developing economies.
    - Input-based efficiency savings estimates (Garcia-Escribano, Juarros, and Mogues 2022):
      - 1.2 percentage points of GDP in advanced economies.
      - 1.4 percentage points of GDP in emerging market economies.
      - 1.0 percent of GDP in LIDCs.
- Micro-level analysis and policy levers:
  - Composition of health expenditure can identify specific inefficiencies (hospitals, primary care, pharmaceuticals).
  - Hospital service efficiency gains from integrating levels of care and increasing investments in primary, community, and preventative care to reduce admissions and adverse incidents.
  - Pharmaceutical spending shows large variation across countries; efficiency gains include increased use of generics, procurement reforms, and tendering.
  - Administrative capacity improvements (employment mix, calibrated devolution) can yield efficiency gains.
- Empirical scores and indicators:
  - Health efficiency scores (output-oriented, 2017 averages by income group shown in Figure 9): example values in source include 0.968, 0.925, 0.888 by income grouping (advanced economies, emerging market economies, low-income developing countries respectively).

### Illustrative country experiences (high-level)
- Tanzania (2000s): expanded access via primary health care strengthening, devolved responsibilities, results-based approaches, weighted capitation budgeting; observed improvements in training and service quality but coverage remains low and inequities persist.
- Thailand (early 2000s onward): Universal Coverage Scheme expanded access to preventive, curative, palliative services; reduced disparities in per capita spending across schemes; in the decade after scheme initiation:
  - Life expectancy at birth rose from 72 to 74 years.
  - Out-of-pocket spending declined.
  - Fewer households incurred catastrophic spending.

_Italic: Source: IMF staff content in “BOX 5. Essential Health Services and Financial Protection” from tnmea2023008._

### BOX 7. Reducing Avoidable Hospital Admissions: The Cases of The Netherlands

### BOX 7. Reducing Avoidable Hospital Admissions: The Cases of The Netherlands

### Overview
- Integration of primary care services with hospital emergency departments is used in some regions to reduce avoidable hospital admissions.
- Approaches aim to increase patient satisfaction and reduce unnecessary use of hospital services.

### The Netherlands: integrated primary care and emergency departments
- Some regions integrate primary care services into hospital emergency departments.
- Triage-dependent patient pathways:
  - Patients either receive a scheduled appointment at a general practice cooperative (a primary care facility) or are directly referred to the emergency department.
- Reported outcomes:
  - Increasing patient satisfaction.
  - Evidence shows these integrated models are associated with a reduction in patient self-referrals to hospitals.

### Norway: larger primary care centers and intermediate care
- Larger primary care centers act as intermediate care facilities delivering nonurgent care and a mix of postacute, rehabilitation, and nursing care.
- Objectives:
  - Strengthen primary care.
  - Curb hospital care costs by reducing unnecessary admissions.

### Key findings and policy implications
- Integrating primary care with emergency services can redirect nonurgent cases away from hospitals via triage and scheduled primary care appointments.
- Establishing intermediate care centers that provide nonurgent, postacute, rehabilitation, and nursing services can reduce unnecessary hospital admissions and contain hospital care costs.
- Benefits observed include increased patient satisfaction and reductions in patient self-referrals to hospitals.

*Source: OECD 2017.*

### BOX 10. Payments to Health Providers

### BOX 10. Payments to Health Providers

### Common payment structures
- Fee for service: A fixed fee for each type of health service. This is a transparent payment structure that reduces financial risks of providers, but that may encourage greater clinical activity and higher costs.
- Diagnostic-related groups: Activity-based payment per patient, based on diagnoses and expected resource use. Unlike fee for service, it is set independent of the intensity of services. Diagnostic-related groups encourage efficiency of services but can lead to a focus on more profitable activities and higher transaction costs.
- Capitation: Lump sum payment per enrolled patient to cover services. Health providers bear the risk if the population they serve needs additional services. Capitation provides incentives to reduce costs and has lower transaction costs, but may lead to increased registrations or fewer services per patient.
- Global budgets: Fixed annual budgets set by a central authority to providers for a range of mandated services. Within this model, wages may be set administratively. Global budgets provide incentives for cost containment and lower transaction costs, but may result in less transparency and rationing of care.
- Wages and salaries: In government health services, without contracting, payments to professionals are based on administratively set wages and salaries. In this model, there are limited financial incentives to deliver high quality services, beyond the value of maintaining a high wage.
- Pay for performance: Payments to health providers based on performance objectives (for example, clinical outcomes for specific groups such as people with diabetes or satisfaction in hospitals). Pay for performance can have a positive effect of on performance, but have high transactions and measurement costs.
- Blended payments: The blending of these different payment structures. For example, in inpatient care, a combination of global budgets, with diagnostic-related groups and some fee for service, or the use of pay for performance.

### Key implications and trade-offs of payment designs
- Financial risk and incentives:
  - Fee for service reduces provider financial risk but may encourage greater clinical activity and higher costs.
  - Capitation transfers risk to providers, encouraging cost containment but risking under-provision of services.
  - Global budgets incentivize cost containment but can reduce transparency and induce rationing.
- Efficiency versus behavior:
  - Diagnostic-related groups encourage efficiency of services but can shift provider focus toward more profitable activities and raise transaction costs.
  - Pay for performance can improve targeted outcomes but entails high transaction and measurement costs.
- Administrative and transaction costs:
  - Payment models differ in transaction costs: capitation and global budgets generally have lower transaction costs; diagnostic-related groups and pay for performance generally have higher transaction and measurement costs.
- Equity and access risks:
  - Models that incentivize cost reduction (capitation, global budgets) can lead to increased registrations or fewer services per patient, or to rationing that may harm access.
  - Private incentives under certain payment systems can lead to differential access to care absent proper regulation.

### Design considerations
- Trade-offs are inherent: choices among fee for service, diagnostic-related groups, capitation, global budgets, wages/salaries, pay for performance, and blended payments involve balancing transparency, provider financial risk, incentives for activity and efficiency, transaction costs, and risks to quality and access.
- Blended payments can be used to balance incentives (for example, combining global budgets, diagnostic-related groups, fee for service, and pay for performance in inpatient care).

*Source: OECD 2016b.*

### BOX 11. IMF Experience with Addressing Health Sector Issues in Surveillance Countries

### BOX 11. IMF Experience with Addressing Health Sector Issues in Surveillance Countries

### Mexico (2019/2021)
- Context and health sector issues:
  - Health care system was fragmented; service delivery was unequal with substantial variation in access across states.
  - Administrative costs account for almost 10 percent of total health spending and insurance premiums are high.
  - Health spending has been growing but is below the level of other emerging market economies.
  - System consisted of separate schemes with parallel provider networks, funding and administrative structures, and lack of coordination increased administrative and insurance costs and contributed to unequal service delivery.
  - System was restructured in 2018: a public health system with integrated finance and provision replaced Seguro Popular.
  - In 2022, IMSS-Bienestar was elevated to a decentralized agency aiming to further improve coverage.
- Reform recommendations (surveillance / Article IV staff advice):
  - Health spending would have to increase by about 1 to 1.5 percent of GDP by 2030 to make progress along the health Sustainable Development Goal.
  - Fiscal pressures would be higher if the share of public sector in total health care provision increases and if spending efficiency is not improved.
  - Specific staff advice included:
    - Investment targeting rural and impoverished areas with deficient access to services.
    - Reduction in administrative and insurance costs.
    - Efforts to improve the portability of insurance.
    - Creation of an information infrastructure compatible across subsystems to improve continuity of care, health outcomes, and reduce beneficiary duplication.
  - Staff advised vigilance to avoid negative effects on health and nutrition from removal of conditionality linked education schemes, especially amid pandemic-related risks such as school dropout and economic scarring.

### Thailand (2016)
- Context and health sector issues:
  - Achieved universal health care coverage under 2002 reforms which consolidated schemes and extended coverage to those not covered by civil servant and formal sector programs.
  - Public health insurance system remained fragmented with wide differences in benefits, contributions, and financing schemes.
  - Faster population aging and higher-than-average health care expenditure among Association of Southeast Asian Nations countries put pressure on the budget.
  - Public expenditure on health care (including that financed by contributions) was expected to increase over the coming decades.
- Reform recommendations (Article IV staff advice):
  - Undertake a comprehensive review of the fragmented schemes and formulate a long-term cost projection across the schemes; set up a central unit within the Ministry of Finance to monitor public health expenditures across all schemes.
  - Improve coordination across different schemes; minimize fee-for-service payment prone to overutilization and increase use of capitation payment and close-ended budget.
  - Review contributions with due consideration to social equity and consider alternative revenue sources, including an increase of value-added tax, which is less distortionary and more growth-friendly.

### Japan (2018)
- Context and health sector issues:
  - Rapid population aging has pushed up social security spending, raising concerns about medium- to long-term fiscal sustainability.
  - Authorities have made tangible progress on pension reform since the early 2000s, but tackling health care pressures is more challenging.
  - Without reforms, public spending on medical and long-term care is projected to double to about 20 percent of GDP by 2050.
  - Financing such a large increase with additional revenue would imply radical and potentially disruptive large tax hikes.
  - Limited room for further containing nonsocial security spending, which is already low by Organisation for Economic Co-operation and Development standards.
  - Situation necessitated a comprehensive set of health care system reforms.
- Reform recommendations (2018 Article IV staff advice):
  - Contain total health care spending, focusing on improving efficiency.
  - Increase the share of out-of-pocket spending while safeguarding low-income households.
  - Options for improving efficiency included:
    - Strengthening the gatekeeper function of primary physicians.
    - Making greater use of generic drugs.
    - Eliminating nonessential services from the public insurance.
  - Staff analysis suggested that a combination of reforms could generate fiscal savings of up to 2 percent of GDP by 2030.

### The Netherlands (2018, 2021)
- Context and health sector issues:
  - Dutch system provides high-quality and accessible health and long-term care services, but rapidly aging population poses significant cost containment challenges.
  - Curative health care system underwent major overhaul in 2006 to transition to a competitive system for insurers to foster efficiency and reduce prices through bargaining.
  - Insurers were tasked with negotiating prices with health care providers.
  - Since reform, there have been efficiency improvements and a shift toward increasing premium differentiation, while the market remained relatively concentrated with limited competitiveness, likely due to barriers to entry.
- Reform recommendations (2018 Article IV staff advice):
  - Quantify positive externalities associated with structural changes, considering interactions between health insurers and hospitals and their relative bargaining power.
  - Regulatory and monitoring agencies should remain vigilant regarding cost-saving measures that risk lower quality of care within the new institutional framework.
  - In the context of the COVID-19 pandemic, staff assessed use of available fiscal buffers to provide ongoing support to the health care sector.

### Program Context: Conditionality, Design, and Implementation Considerations
- Key considerations for incorporating health policies and reforms in IMF-supported programs:
  - Authorities’ ownership, country-specific circumstances, and administrative capacity are critical.
  - Ownership is important for achieving program goals and durability after program completion; health reforms should be aligned with authorities’ long-term development goals and embedded into medium-term fiscal frameworks.
  - Policy options should account for administrative capacity; a gradual approach may be warranted for countries with low capacity.
  - Coordination with other multilateral institutions is critical to identify and design health reforms; IMF lacks specialized health expertise and partner institutions can support design, implementation, and post-program follow-up.
  - The IMF remains ultimately responsible for design, establishment, implementation, and monitoring of conditionality under IMF-supported programs.

- Forms of conditionality and typical use in health-related matters:
  - Quantitative conditions:
    - Include quantitative performance criteria (QPCs) and indicative targets (ITs).
    - Explicit quantitative conditionality is unusual for health measures or spending, with some exceptions in postpandemic programs (for example, Democratic Republic of Congo 2021 ECF).
    - Health outcomes often implicitly embedded in other program targets (e.g., QPCs on fiscal deficit or government expenditure; ITs to set floors on social spending).
    - When critical for fiscal sustainability, quantitative conditionality could focus on comprehensive coverage of public health spending, including both government and health insurance schemes; where data are unavailable, focus may be narrower on government health spending.
  - Structural benchmarks (SBs):
    - Used to promote reforms to improve coverage and spending efficiency.
    - Examples: developing action plans to strengthen efficiency and quality of health spending (Ecuador 2019 EFF); strengthening human resource management (Ghana 2015 ECF).
    - SBs and quantitative conditions often complement each other.
  - Prior actions:
    - Measures agreed to be taken before IMF Executive Board approval or program review; prior actions on health measures are possible if they respect applicable conditions.
- Evidence and practice:
  - Quantitative conditions on health spending are unusual, but floors on social spending are widely used and often include and protect health spending.
  - Empirical evidence suggests that, on average, under IMF-supported programs, health spending would be higher or the same as in nonprogram countries after controlling for macroeconomic conditions.
  - Structural public financial management conditionality can be effective in boosting long-term health expenditures.
  - Design of social spending floors can help protect health spending when health is included under the floors.
  - Engagement on health spending issues has been gaining emphasis in IMF-supported programs and is likely to expand, particularly following the COVID-19 pandemic.
  - Recent emergency support and program financing emphasized generating additional fiscal space to boost health capacity in response to the COVID-19 pandemic.
  - The Resilience and Sustainability Trust is likely to expand staff engagement on health issues related to long-term financing of pandemic preparedness and response.

### Greece (2010 Stand-by Arrangement and 2012 Extended Fund Facility) — Illustrative Program Case
- Context and health sector issues:
  - 2010 debt crisis required fiscal consolidation; health sector reform was a key pillar alongside pension and wage reforms.
- Reform actions:
  - Reforms comprised both “macro” policy changes and “micro” structural reforms.
  - Initial stage under the 2010 Stand-by Arrangement focused on “macro” reforms including budget caps and improvements in pricing mechanisms.
  - Over time, focus shifted to “micro” reforms: promotion of gatekeeping, e-prescriptions, and generic drugs.
  - Government advanced simplification of fragmented system by establishing the Single Organization for the Provision of Healthcare Services (EOPYY) and merging all health funds in EOPYY.
  - Comprehensive reform curtailed public health expenditure by nearly 2 percentage points, from 6½ percent of GDP in 2010 to 4¾ percent of GDP in 2018, below the OECD average of 6½ percent of GDP.
  - However, unmet demands in medical and dental care among low-income households emerged, requiring rebalancing of spending toward this vulnerable population.
- Conditionality:
  - Under the 2010 SBA, authorities committed in the Memorandum of Economic and Financial Policies to improve pricing and cost mechanisms, simplify the fragmented system, and implement budget caps.
  - Budget caps were introduced as performance criteria on overall expenditure, not as direct caps on public health spending.
  - Under the 2012 EFF, the authorities’ Memorandum committed to structural measures such as promoting use of generic drugs and merging all health funds under EOPYY.
  - The 2012 EFF did not introduce quantitative conditionality directly capping health spending.
  - Neither the 2010 SBA nor the 2012 EFF adopted structural benchmarks specific to health sector reforms.

*Source: BOX 11. IMF Experience with Addressing Health Sector Issues in Surveillance Countries (tnmea2023008).*

### Box 12. Country Experiences with Addressing Health Spending Issues in IMF-

### Box 12. Country Experiences with Addressing Health Spending Issues in IMF-Supported Programs (continued)

### Ecuador (2019 and 2020 Extended Fund Facility)
- Context and health sector issues:
  - Rising public debt required Ecuador to embark on comprehensive fiscal reforms under the 2019 EFF.
  - The country has been addressing health sector reforms within broader fiscal consolidation.
- Reform actions:
  - Authorities aimed to strengthen the efficiency of health spending under the 2019 EFF including through technical assistance from the World Bank.
  - Reforms were not completed under the 2019 EFF; authorities placed emphasis on improving spending efficiency, including in the health sector, under the subsequent 2020 EFF.
  - In 2020, the IMF disbursed $4.6 billion (4.3 percent of GDP) under the EFF and Rapid Financing Instrument to help Ecuador address the effect of the COVID-19 pandemic.
  - In 2021, pandemic-related spending increased by $1 billion, much of it for health, including on vaccines.
  - Specific actions included:
    - Issuance of decrees to reform the procurement system to make it more competitive and less cumbersome.
    - Lowering the barriers to entry.
    - Creating reference prices for standardized medicines and medical equipment to limit medical costs.
    - Committing to conduct medical audits of public pensioners’ health care claims to ensure appropriate treatment and prescription protocols are being followed.
- Conditionality:
  - The 2019 EFF adopted an SB on the publication of an action plan to strengthen the efficiency and quality of primary education and health spending; the authorities were not able to implement this SB under the 2019 EFF.
  - In the MEFP at the request for the 2020 EFF, the authorities committed to improving public procurement efficiency and generating fiscal savings.
  - To achieve these objectives, they subsequently identified concrete actions (as listed under reform actions).

### Madagascar (2016 Extended Credit Facility)
- Context and health sector issues:
  - Given the persistence of poverty, the key objectives of the 2016 Extended Credit Facility (ECF) included ensuring macroeconomic sustainability and achieving sustainable and inclusive growth.
  - Addressing these challenges required shifting resources toward priority areas such as health, education, and infrastructure.
- Reform actions:
  - Authorities aimed at increasing health sector resources and integrating health spending in their medium-term budget framework to secure resources for priority health spending in a systematic and strategic way.
  - Through this approach they intended to address long-standing health challenges such as nutrition, vaccination, and infant and maternal health.
- Conditionality:
  - The ECF introduced an indicative target on social spending that covered health sector spending and an SB on the integration of the health and education sector spending plans within a medium-term budget framework, the latter of which was met.
  - In the MEFP at the time of the ECF request, the authorities also committed to improving the quality of health services, in addition to expanding the sector’s resources, and expressed their intention to establish the foundation for achieving universal health coverage.

### Ghana (2015 Extended Credit Facility)
- Context and health sector issues:
  - Before the 2015 ECF, Ghana faced rising public debt and consequently, high interest payments, which constrained development and social spending.
  - This situation necessitated the implementation of a sizable and frontloaded fiscal adjustment, while safeguarding priority social and health spending.
- Reform actions:
  - Alongside containing nonpriority spending, the authorities continued to expand social spending, including health sector spending, by utilizing savings generated through fiscal consolidation.
  - They expanded the volume of social spending and improved efficiency in the health sector by enhancing human resource management.
  - The 2014 Article IV staff report, which analyzed social inclusion as a key objective on the authorities’ agenda, provided inputs for policy discussions on these actions.
- Conditionality:
  - The 2015 ECF set a social spending indicative target, which covered selected health and social safety net programs.
  - To improve spending efficiency in the health sector, the ECF also adopted an SB on strengthening human resource management in the sector (integration of payroll and human resource management systems), which the authorities implemented during the ECF period.
  - IMF staff collaborated with the World Bank, which engaged with the authorities on social spending issues, including health programs and Ghana’s National Health Insurance Scheme.

*IMF staff summary.*

### Annex 2. Typical Health Policy Options (continued)

### Annex 3. COVID-19 and Pandemic Preparedness

### Key findings and macroeconomic impact
- As of early 2023, there were 759 million reported cases of COVID-19.
- Excess mortality was of more than 14.9 million people.
- There were more than 6.8 million reported deaths.
- The economic consequences included the largest drop in global GDP (of over 3 percent) and the largest rise in public debt (of more than 9 percent of GDP or more) in more than half a century.
- Global economic losses from COVID-19 were described as being in the trillions.

### Preparedness capacity and gaps
- Only 15 percent of countries have an average health security summary (Joint External Evaluations) score of more than 80 (consistent with demonstrated health security capacity).
- Nearly one-third of countries have a Joint External Evaluations score of 40 or less (consistent with no or limited capacity in core components).
- A lesson from COVID-19 is that these capacities must be deployable in an emergency.

### Pandemic toolkit: global, national, and health system dimensions
- Global instruments:
  - Channel multilateral and regional efforts to support effective national actions (for example, surveillance and border control).
  - Set standards and frameworks (for example, diagnostics and monitoring).
  - Mobilize resources across borders (for example, finance, workforce, and supplies).
- National frameworks and institutions:
  - Enable prevention, detection, and response activities between public and private institutions.
  - Include reliable budget and public financial management systems, enabling legal frameworks, credible and adequately resourced plans, and stress-tested capability across government.
- Health system strengthening:
  - Important for managing the health consequences of the pandemic as well as detecting and preventing pandemics.
  - Elements such as testing and tracking capacity, a public health function, and health system capacity also build resilience against future outbreaks and health shocks.

### Costs, financing, and resourcing principles
- Pandemic preparedness costs have been estimated to be as low as 1 percent of health budgets for LIDCs and a further $15 billion per annum from international financing (G20 High Level Independent Panel 2021).
- Pandemic preparedness requires long-term resourcing.
- Financing should:
  - Support national ownership.
  - Achieve multiple benefits over the medium term (such as investments in primary health care that support both health and pandemic preparedness).
  - Support an enduring focus.

### Strategic lessons and policy recommendations (selected)
- Early identification and management of infectious disease outbreaks in countries is essential to prevent global pandemics; global health is vulnerable to weak individual country preparedness.
- Capacities for health security must be deployable in emergencies.
- From Agarwal and others (2022), needs highlighted include:
  - (1) achieve equitable access beyond vaccines to encompass a comprehensive toolkit;
  - (2) monitor the evolving virus and dynamically upgrade the toolkit;
  - (3) transition from the acute response to a sustainable strategy toward COVID-19, integrated with other health and social priorities; and
  - (4) create a unified risk-mitigation approach to future infectious disease threats beyond COVID-19.
- National and global actions should be coordinated to ensure surveillance, standards, resource mobilization, and legally and financially enabled response capacities.

*Annex 3. COVID-19 and Pandemic Preparedness — TNM/2023/08*

---


_Source: https://www.imf.org/-/media/files/publications/tnm/2023/english/tnmea2023008.pdf_