Macroeconomics and Health (CMH)

MacroHealth Newsletter

No. 8, March 2004

Maintaining and strengthening Sri Lanka’s health system

Major macroeconomic and social services reforms are planned in Sri Lanka. Despite having achieved impressive health indicators, including high life expectancy and low infant and maternal mortality, Sri Lanka is currently facing economic challenges which jeopardize its ability to maintain and improve its health sector performance, particularly given the current insufficient level of health sector spending. Within the Poverty Reduction Strategy Paper (PRSP) and Vision 2010 – which formulated an economic development strategy calling for sustained 7 to 9 % annual GDP growth – Sri Lanka has produced policy documents focusing on macroeconomics, health, and poverty issues. The National Commission on Macroeconomics and Health (NCMH) is also playing an important complementary role in spearheading the formulation of a pro-poor National Health Policy.

Research carried out by these initiatives calls for better human resource planning, as well as an effort to improve the decentralization in Sri Lanka’s health sector. Importantly, it highlights the need for total health expenditure to increase from 3.6 % of GDP (2001), which is too little to cover current health financing needs and will be far insufficient to meet the country’s rising double burden of communicable and non-communicable diseases. But how much Sri Lanka will be able to invest in its health sector will depend to a large extent on its economic growth rate.

Given the epidemiological and financial challenges, Sri Lanka’s National Health Council is looking to the NCMH for support in policy direction, identification of priority areas for intervention and a mechanism for monitoring, evaluating, and implementing health sector activities. Presently, the NCMH complements the PRSP, Vision 2010, and efforts towards the achievement of the MDGs by providing a policy direction for the human development component of national plans. The NCMH has commissioned a report entitled “Macroeconomics and Health Initiatives in Sri Lanka”, in which it examined several strategies for mobilizing funding for health, including the feasibility of private insurance, community financing, and ear-marked taxes. The Commission continues to be active in disseminating the key findings of the CMH Report, namely that investment in health is key to socio-economic development.

Hon. Mr P Dayaratna
Minister of Health, Nutrition & Welfare


Macroeconomics and Health makes strides in Nepal

The Nepalese Ministry of Health, high-level representatives from various Nepalese ministries, WHO, and donor agencies met in January 2004 to discuss the main conclusions of a comprehensive Macroeconomics and Health situational analysis and agreed on work towards preparing a national Health Investment Plan. They noted that while Nepal has good pro-poor policies in place, more focus is needed on pro-poor health interventions and more resources must be mobilized for health. Participants included the Head of the Health Economics and Financing Unit in Nepal’s Ministry of Health, the core members of Nepal’s Sub-Committee on Macroeconomics and Health, and the WHO Representative for Nepal.

The situational analysis found that Nepal has a well-developed administrative structure that is becoming increasingly decentralized and described a number of important analytical advances, including the identification and costing of essential health care services and the establishment of national health accounts. Donor support for strengthening the health system in Nepal was reported to be strong. However, there are large disparities in major socio-economic indicators among the population living in remote areas, inadequate numbers of health workers in rural areas and a growing and unregulated private sector. The central government spends only about $3 per capita per year on health, and the health budget has increased less than the general budget in recent years. At the same time, user fees and regressive taxes are placing an unfair burden on the poor; GDP per capita in 2003 was only $238.

In addition to raising domestic and external funding significantly, the analysis suggested promoting prepayment of health expenses and measures to limit out-of-pocket payments. The International Labour Organization recently undertook a mission to Nepal to analyze the feasibility of social health insurance as a pre-payment mechanism. Given the fragmented context of Nepal, it was decided to use the district as the working unit and to develop district health and poverty profiles. These profiles will be used to focus Nepal’s District Health Plans on essential interventions targeted to the poor. Advocacy activities, including organizing a national meeting to disseminate the key messages of Macroeconomics and Health, are planned.

A consultant from the Royal Tropical Institute (KIT) of Amsterdam visited Nepal in mid-December 2003 to help with this initial assessment of Nepal’s health system and health financing, and to present the Macroeconomics and Health approach as a means for mobilizing additional resources for health. She worked alongside Nepal’s National Commission for Macroeconomics and Health (NCMH), which was set up in mid-2002 under the Committee for Sustainable Development and has a core team of three people, one each from the Ministry of Finance, Ministry of Health, and Planning Commission.