Innovative domestic financing mechanisms for health in Africa: An evidence review

Abstract

Objectives This article synthesizes the evidence on what have been called innovative domestic financing mechanisms for health (i.e. any domestic revenue-raising mechanism allowing governments to diversify away from traditional approaches such as general taxation, value-added tax, user fees or any type of health insurance) aimed at increasing fiscal space for health in African countries. The article seeks to answer the following questions: What types of domestic innovative financial mechanisms have been used to finance health care across Africa? How much additional revenue have these innovative financing mechanisms raised? Has the revenue raised through these mechanisms been, or was it meant to be, earmarked for health? What is known about the policy process associated with their design and implementation? Methods A systematic review of the published and grey literature was conducted. The review focused on identifying articles providing quantitative information about the additional financial resources generated through innovative domestic financing mechanisms for health care in Africa, and/or qualitative information about the policy process associated with the design or effective implementation of these financing mechanisms. Results The search led to an initial list of 4035 articles. Ultimately, 15 studies were selected for narrative analysis. A wide range of study methods were identified, from literature reviews to qualitative and quantitative analysis and case studies. The financing mechanisms implemented or planned for were varied, the most common being taxes on mobile phones, alcohol and money transfers. Few articles documented the revenue that could be raised through these mechanisms. For those that did, the revenue projected to be raised was relatively low, ranging from 0.01% of GDP for alcohol tax alone to 0.49% of GDP if multiple levies were applied. In any case, virtually none of the mechanisms have apparently been implemented. The articles revealed that, prior to implementation, the political acceptability, the readiness of institutions to adapt to the proposed reform and the potential distortionary impact these reforms may have on the targeted industry all require careful consideration. From a design perspective, the fundamental question of earmarking proved complex both politically and administratively, with very few mechanisms actually earmarked, thus questioning whether they could effectively fill part of the health-financing gap. Finally, ensuring that these mechanisms supported the underlying equity objectives of universal health coverage was recognized as important. Conclusions Additional research is needed to understand better the potential of innovative domestic revenue generating mechanisms to fill the financing gap for health in Africa and diversify away from more traditional financing approaches. Whilst their revenue potential in absolute terms seems limited, they could represent an avenue for broader tax reforms in support of health. This will require sustained dialogue between Ministries of Health and Ministries of Finance.