Can Low- and Middle-Income Countries Increase Domestic Fiscal Space for Health: A Mixed-Methods Approach to Assess Possible Sources of Expansion

Abstract

There has not been a systematic effort to synthesize findings of domestic fiscal space for health (DFSH) assessments, despite the existence of a commonly applied conceptual framework. To fill this gap and provide support to policy makers designing health financing policies toward universal health coverage (UHC), this study uses both qualitative and quantitative methods to assess the scope of possible sources of DFSH in low- and middle-income countries (LMICs). First, the findings of 28 studies assessing DFSH in LMICs were reviewed. A quantitative assessment was then conducted to assess potential expansion from increased tax revenues, a greater prioritization of health in the overall budget, and improved technical efficiency of health spending in a sample of 64 LMICs. The analysis found that macroeconomic conditions and budget prioritization are the key sources of DFSH expansion in 90% of the reviewed studies. Improved efficiency was referenced as having high potential for DFSH expansion in 60% of the studies. The quantitative analysis converged with these findings and further confirmed that an increase in tax revenues is, on average, the largest source of potential DFSH expansion (95% confidence interval [CI], 60%, 96%) in the studied countries. However, even without injecting new revenues, reprioritization of budget and technical efficiency improvements could significantly expand DFSH (95% CI, 77%, 102%). While highlighting the critical role played by fiscal conditions and tax policies, the study provides strong rationale for explicitly incorporating efficiency as a core source of DFSH in a more systematic manner in future assessments.

Social health protection in Cambodia: Challenges of policy design and implementation

“…ear‐marked taxes) must be planned and prepared in advance to avoid potential disruption. In addition, the government should perform periodically a fiscal space analysis for each scheme, as well as for the overall social health protection system, and examine the different revenue sources and assess their performance as well as identify the root causes of good or poor performance (Barroy, Sparkes and Dale, ).…”

Budgeting challenges on the path towards universal health coverage: the case of Benin

“…Aggregate fiscal discipline is a desired public sector outcome stemming from the appropriate control of public resources [ 10 ]. Whereas the term “discipline” may be viewed negatively, as a coercive means aimed at shrinking public (social) expenditure, this principle has actually been reinvigorated through the acceptance of a more positive concept which has gained a lot of attention in the past decade: that of fiscal space [ 11 – 14 ]. “In the broadest sense, ‘fiscal space’ can be defined as the capacity of government to provide additional budgetary resources for a desired purpose without any prejudice to the sustainability of its financial position” [ 15 ].…”

“…“In the broadest sense, ‘fiscal space’ can be defined as the capacity of government to provide additional budgetary resources for a desired purpose without any prejudice to the sustainability of its financial position” [ 15 ]. The concept of fiscal space has been refined over time and encompasses a number of policy options, the most commonly used being mobilizing additional revenues, increasing prioritization of budget toward health, and improving technical and allocative efficiency of health expenditure – or a combination of these [ 16 ].…”

“…The above-mentioned specific taxes are certainly not sufficient to sustain funding for the UHC scheme – even in the event that they were actually earmarked for it. Overall, fiscal space for health studies show significant power of economic growth, budget reprioritisation and efficiency improvement measures to drive fiscal space for health expansion, but the limited evidence available is not conclusive in showing potential for earmarked funds, be it in the form of public health taxes or social health insurance contributions, to provide a large-scale, sustained expansion of fiscal space for health [ 14 , 26 ]. So, while the broad fiscal measures pointed to above are laudable, it appears that the authorities seem to have considered mainly the policy option of mobilizing additional revenues so as to create fiscal space for the ARCH project, but has overlooked the options of increasing prioritization of budget toward health, and improving technical and allocative efficiency of health expenditure.…”

Improving fiscal space for health from the perspective of efficiency in low- and middle-income countries: What is the evidence?

“…Since then, many LMICs have assessed fiscal space for health and reviewed fiscal space in relation to the five mechanisms of potential expansion above [ 8 ]. Some of the findings from these assessments indicate that significant space can be generated through efficiency gains [ 9 ] – if the same level of outputs could be achieved with a smaller level of inputs, more resources could be made available and reallocated within the sector. However, research on efficiencies in the health sector has not been effectively folded into the existing literature on fiscal space for health.…”