Making the case for increasing the national budget allocation to the health sector is critical if more domestic resources are to be garnered for financing universal health coverage. Yet, there are competing priorities for more allocation for other sectors. While political will remains pivotal to decisions on national priorities, against limited resources, fiscal managers- such as ministries of finance or treasury- have a challenging job translating national priorities into budget allocations for sectors.
As a result, like other sectors, the health sector must make a convincing case for more allocation. Strengthening the case for the health sector was a subject of discussion at the Universal Health Coverage (UHC) Financing Forum co-hosted by the World Bank and the United States Agency for International Development (USAID).
Ministries of health can learn from four main points that came out of the discussion:
- avoid generic arguments;
- link revenue raising requests to an investment or a spending plan;
- pursue a multi-sector collaborative or solidarity approach; and
- advocate for political support.
On the first point, making generic arguments such as the need to reduce malaria or that an increase in the health allocation promotes the general well-being of the population and hence contributes to economic growth is unconvincing. Other sectors, such as Water and Sanitation or Environment, can equally make such a case.
With respect to the economic growth argument, given the immediate and tangible economic activities generated by investments in sectors like transport, infrastructure and energy, such sectors have a lesser challenge in making the case for increased allocation relative to the health sector. Against this background, linking the health sector request for increased budget allocation to tangible outputs or outcomes is necessary. For instance, showing how a $1 increase in health spending will help reduce malaria by x% will help a ministry of finance to quantify results and the return on investment in health. Furthermore, to ensure credibility, such output estimations should be backed by strong administrative, governance and accountability processes, as well as implementation arrangements.
Link revenue raising requests to an investment or a spending plan:
On the second point, Ministries of Finance are concerned about fiscal sustainability. While soft earmarking could enhance the revenue-raising potential for the health sector, such revenue can only be justified in the eyes of ministries of finance or treasury when linked to a clear spending or an investment plan. As such, all sectors, including health, should not ask for more allocation without a spending plan. In making the case for health sector-specific revenue generation strategies such as sin taxes, tax rate increases for health sector-specific priorities or insurance funds, for example, it will be crucial to link such proposals to a medium-term revenue strategy at the macro level, and to have a credible spending plan or budget.
Pursue a multi-sector collaborative or solidarity approach:
On the third point, a multi-sector collaborative or solidarity approach may also strengthen the case for increased allocation for the sector. In Japan, the social sectors—education, health and social protection—and transport collaborated to make the case for investments in universal health coverage. The nexus with the transport sector was road safety. This multi-sector collaboration helped connect the dots among significant investments in training doctors and community health workers in Japan after World War II, improved education outcomes, better road safety and overall wellbeing of the population. Although, with Japan’s aging crisis, there are new challenges around the financial sustainability of caring for a large percentage of seniors (about 25.9% of population aged above 65 years), the collaborative approach is helping to keep financing of the health sector as a priority agenda.
Advocate for political support:
Finally, political will is needed if the health allocation is to be increased, as was the experience in Ghana. The decision to earmark a Value Added Tax increase of 2.5% to finance the Ghana National Health Insurance Scheme was done in fulfilment of a political campaign promise. Although, the scheme has faced financial sustainability challenges in recent years, partly because not all the earmarked tax revenues were transferred and because of operational efficiency issues. There is still continued government commitment to funding the scheme while exploring ways to improve its operational efficiency and broadening its funding sources.
There is not a one-size-fits-all approach to making the case for increased funding of the health sector. Notwithstanding, other countries’ experiences can be beneficial in shaping one’s own approach to the dialogue with ministries of finance and other relevant stakeholders.
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