Government of Zambia Ministry of Health Policy Brief Zambia National Health Accounts 2013-2016 Key Findings • In nominal terms, total Current Health Expenditure (CHE) in Zambia increased by 36 percent from ZMW 7.1 billion in 2013 to ZMW 9.7 billion in 2016. On the other hand, gross capital formation increased by 76 percent from ZMW 297 million in 2013 to ZMW 521 million in 2016 mainly due to increased government expenditure in infrastructure development. • In per capita terms, total CHE in Zambia increased from ZMW 487 in 2013 to ZMW 607 in 2016. However, in US$ terms, there is a declining trend in total CHE per capita from US$90 in 2013 to US$59 in 2016. Zambia’s total CHE per capita in 2016 was below the average for lower-middle income countries (LMICs) which was estimated at US$82 in 2016. • The health sector remains dependent on external assistance (donors) with an average of 42 percent (US$30 per capita) of the total CHE coming from donors during the period 2013−2016, and 41 percent (US$28 per capita) from government. In the absence of donor funds, it will be difficult to sustain funding and program implementation. • At 12 percent of total CHE, household spending on health in Zambia is lower than several countries in Africa. However, most of these funds are spent out-of-pocket (OOP) due to lack of/insufficient prepayment and risk pooling mechanisms. • Allocation of funds by different levels of the health system is sub-optimal. Hospitals account for 34 percent of total CHE, followed by ambulatory care (19 percent) and preventive care (17 percent). This calls for a realignment to primary health care. • 70 percent of the total funding from donors in the health sector is earmarked to HIV/AIDS and STIs. Earmarking reduces efficiency in resources allocation and capability of the government to optimize total funding across all programs. 1. Introduction 4.2. Who funds health spending? This policy brief presents findings and policy implications The donors, government and households are the three of Zambia’s National Health Accounts study for the period biggest contributors to health spending in Zambia. Over 2013 to 2016. By design, the National Health Accounts the period 2013−2016, donors contributed an average of 42 (NHA) survey framework estimates all expenditure and percent of total CHE while the government contributed 41 financial flows through the health system from sources to percent, and households contributed 12 percent (Figure 2). final uses and beneficiaries. The evidence that is generated Employers and non-profit institutions serving households allows decision-makers to gain a better understanding of (NPISH) contributed 5 percent of total CHE on average over the existing health financing landscape, which is critical for the same period. making policy decisions and planning. 4. General Findings Figure 2: Sources of total CHE in Zambia Figure 2: Sources of total CHE in Zambia 2. Methods 4.1. How much does Zambia spend on health? The 2013−2016 NHA survey uses the 2011 system for health accounts (SHA) analytical framework, which is an Over the period internationally standardized2013-2016, Zambia’s tool to collect, analyze,total and nominal CHE increased by 36 percent from ZMW describe health financing systems. 7.099 billion in 2013 to ZMW 9.674 billion in 3. Data 2016. Sources In per capita terms, total CHE increased from ZMW487 per capita in 2013 to ZMW607 in The study used primary and secondary data sources. 2016. 4. However, General Findings Primary if expressed data was collected in US$, total from government CHE ministries Figure 2: Sources of total CHE in Zambia declined and from departments, US$ 1.317 cooperating billion in partners, 2013 NGOs, to US$ private employers, 938 and insurance companies involved in health 4.1.million in 2016. Similarly, total CHE per How much does Zambia spend on health? delivery. In addition, health expenditure from households capita expenditure declined from US$90 in 2013 was estimated using data from the 2014 Zambia household to Over US$59 health the in period expenditure2016. and This can 2013-2016, utilization be attributed survey. Zambia’s to a total decline in the value of nominal CHE increased by 36 percent from ZMW the Zambian Kwacha The large share of external funding suggests a huge 4. General during 7.099 the period billion Findings in under 2013 to review. Zambia’s ZMW 9.674 total billion in The large share dependency of external on external funding assistance suggests to implement a key health 2016. sector per does In much spending capita in terms, 2016 total was below CHE increased the huge programs and activities on dependency external in the assistance health sector. This couldto 4.1. How Zambia spend on health? be unsustainable the medium-to-long inprograms term given average for LMICs which is estimated at US$82. from ZMW487 per capita in 2013 to ZMW607 in implement key and activities in that the Zambia is now a LMIC. Given its income status, the country health sector. This could be unsustainable in the Over the 2016. period 2013-2016, However, if expressed Zambia’s in total US$, nominal total CHE CHE has to find alternative ways of financing the health sector in increased by 36 percent from ZMW 7.099 billion in 2013 to Figure 1: Trends in total CHE (nominal terms) declined from US$ 1.317 billion in 2013 to US$ medium-to-long term given that Zambia is now a view of the fact that external assistance will likely reduce in ZMW 9.674 billion in 2016. In per capita terms, total CHE LMIC. Given its income status, the country has to the near future. 938 million 12,000 in 2016. Similarly, increased from ZMW487 per capita in 2013 to total 607 CHE ZMW607per 700 in find alternative ways of financing the health capita expenditure declined from US$90 in 2013 2016. However, if expressed in US$, total 526 CHE declined from 600 Another cause for concern is the low contribution from 10,000 sector in view of the fact that external assistance to US$ US$59 in 1.317 billion 2016. This can be attributed to a 487 in 2013 to US$ 938 million in 2016. Similarly, private firms and corporations towards the funding of the total CHE per capita expenditure 426 declined from US$90 will likely reduce in the near future. 500 in 8,000 in the decline value of the Zambian Kwacha health sector. If harnessed properly, these organizations can 2013 to US$59 in 2016. This can be attributed to a decline beThe large share an additional sourceof external of financing for the healthsuggests funding sector in a during the ofperiod under during Zambia’s review. total 400 Millions in the value 6,000 the Zambian Kwacha the period under Another the cause medium-to-long for term as theconcern economy is grows. the low to health sector total spending in 2016 was in below the huge dependency on external assistance 9,674 review. Zambia’s health sector spending 2016 300was contribution from private firms and corporations 8,135 average for LMICs which is estimated at US$82. below the average for LMICs which is estimated at US$82 implement 4.3. Risk Pooling key programs and activities in the 7,099 4,000 towards the funding of the health sector. If 6,397 200 health sector. This could be unsustainable in the Figure 1: Trends in 90 total CHE69 (nominal terms) harnessed Households properly, are protectedthese from the organizations burden of catastrophiccan be 2,000 Figure 1: Trends in total CHE (nominal terms) 61 59 100 medium-to-long term given that Zambia is now a 1,317 1,040 943 938 an additional health costs through source of financing risk pooling. Risk pooling for the health highlights the 12,000 0 700 LMIC. Given its income status, the country has to 0 607 sector in the level of equity medium-to-long in paying for health and the term extent as the to which 2013 2014 2015 2016 find alternative households are burdened ways when of theyfinancing require healthcare.the health 526 600 economy grows. 10,000 Total CHE (ZMW) 487 Total CHE (US$) sector in view of the fact that external assistance Table 1: Total CHE by financing schemes (%) Total CHE per capita (ZMW) 426 Total CHE per capita (US$) 500 will likely reduce in the near future. 8,000 4.3. Risk Pooling 400 Millions 6,000 Another cause for 2013concern 2014 2015 is the 2016 low 4.2. Who funds health spending? Households are protected from the 53.2burden of 9,674 300 Central government 34.6 53.3 50.7 4,000 contribution from private firms and corporations 8,135 catastrophic health costs through risk pooling. 7,099 towards the Regional/local funding 0.5 government of the 0.8health 1.7 sector. 3 If 6,397 The donors, government and households are the 200 Risk pooling highlights the level of equity in three biggest contributors to health spending in 90 harnessed Voluntary health properly, insurance these 0.4 organizations 0.5 0.4 can 0.7 be 2,000 69 61 59 100 paying for health and the extent to which Zambia. Over 1,317 the period 1,040 2013−2016, 943 938 donors an additional NPISH households source of are burdened 48.3financing when 25 they for 28.1 the health 25.4 require 0 contributed an average 0 sector in the medium-to-long term as 6.3 the 2013 2015percent 2014 of 42 2016of total Enterprise healthcare. 2.9 3.7 3.6 CHE while the government Total CHE (ZMW) contributed 41 Total CHE (US$) economy grows. Household Out of Pocket 11.4 13.8 12.2 12.1 percent, and households contributed 12 percent Total CHE per capita (ZMW) Total CHE per capita (US$) Table 1: Total CHE by financing schemes (%) Rest of the World 1.8 2.9 0.7 1.7 (Figure 2). Employers and non-profit institutions 4.3. Risk Pooling 2013 2014 2015 2016 serving households (NPISH) contributed 5 In 2016, about 51 percent of the Central government total 53.3 34.6 CHE was 53.2 50.7 channelled 4.2. Who funds health spending? percent of total CHE on average over the same Regional/local government through public Households institutions, are NPISH protected 0.5 accounted0.8 for1.7 from the 25 percent, burden 3 of Voluntary health insurance and households accounted for 0.4 12 0.5 through percent 0.4 0.7 out- period. catastrophic health costs NPISH 48.3 through 25 risk pooling. 28.1 25.4 The donors, government and households are the of-pocket (OOP) spending. NPISH financing schemes Risk pooling highlights the level are an important channel for disbursing earmarked HIV/ in of Enterprise 2.9 3.7 3.6 equity 6.3 three biggest contributors to health spending in AIDS Household Out of Pocket paying for health expenditures by donors. and 11.4 And the 13.8 extent in comparison 12.2 to 12.1 which to other Rest of the World 1.8 2.9 0.7 1.7 Zambia. Over the period 2013−2016, donors countries households are in the region, burdened OOP spending when on health they require in Zambia contributed an average of 42 percent of total healthcare. Zambia National Health Accounts 2013-2016 Policy Brief – December In 2018 2016, about 51 percent of the total CHE was 3 CHE while the government contributed 41 channelled through public institutions, NPISH Allocation of funds to the different levels of care Infectious Diseases 68 58 63 59 within the health system is sub-optimal. HIV/AIDS and STIs 43 28 32 34 Hospitals account for 34 percent of total CHE in Tuberculosis 0 1 1 1 is very low. However, the study also shows low levels of Earmarking external resources to15 Malaria 16 and HIV/AIDS 18 other 13 Zambia, followed by ambulatory care (19 voluntary prepayment, which could be attributed to a lack diseases reduces the resource allocation Reproductive health 9 capabilities 11 of the 9 8 percent) and preventive and/or insufficient prepayment and service providers risk pooling mechanisms(17 government, and policy space to optimise Nutritional deficiencies 1 funding 1 across 1 all 1 percent). in the country. Henceforth, though even in the Currently, participation more private health programs. Non-communicable diseases 8 11 10 10 insurance market is very low and doesn’t promote risk Injuries 2 4 4 3 resources pooling. are expected to go to primary health 5. Policy Implications and recommendations care in line with government’s vision, this is not 4.4. Resource Allocation The government increased its nominal a) Percentage of total donor spending72 on the 70 the case. This could be explained by the fact that CHE on HIV/AIDS health sector during the period 2013—2016. However, district, Allocationsecondary of funds to and tertiary hospitals the different withina levels of carehave the health sector is still heavily dependent on external the health system is sub-optimal. Hospitals account for 34 funding, which is not sustainable. Therefore, the high number of health workers as compared to percent of total CHE in Zambia, followed by ambulatory care Earmarking external resources to HIV/AIDS and government should: the health centres, high concentration of doctors (19 percent) and preventive service providers (17 percent). other diseases reduces the resource allocation (who are even Henceforth, paid 6-times though moremore resourcesthan the other are expected to • Raise additional resources from alternative domestic capabilities of the government, and policy space go to primary health care in line with government’s vision, sources. Among the options, there should also health workers), high consumption of drugs and this is not the case. This could be explained by the fact that to optimise funding across all programs. be increased focus on improving efficiency in the medical supplies, district, secondary and provision and tertiary hospitals haveof in-patient a high number allocation and use of the available resources. of health workers as compared to the health centres, high requisites including food, linen, and ambulance concentration of doctors (who are paid 6-times more than 5.• Policy Implications and recommendations In the short-to-medium term, the government should services. Most the other health importantly, workers), there has high consumption been of drugs anda ensure that a greater portion of funding from external sources is provided in a flexible manner in order to huge increase in expenditure on salaries and medical supplies, and provision of in-patient requisites The increase results point to efficiency a number in resource and use. in the of issues allocation including food, linen, and ambulance services. Most wages in the health sector in Zambia; the bulk of importantly, there has been a huge increase in expenditure health care financing system in the country. • Government should strengthen the role of the private which has been at hospital level. on salaries and wages in the health sector in Zambia; the bulk Therefore, the government should institute the sector in healthcare financing and service provision. of which has been at hospital level. following measures to improve the situation: This could be achieved through micro-financing and Figure 3: Distribution of CHE by Healthcare Figure 3: Distribution of CHE by Healthcare Providers, workplace programs. 2016 Providers, 2016 a) The b) The government analysis increased shows that resource its pooling and risk nominal spending mechanisms in on the are Zambia still insector health during their infancy. Thethe Providers of government should: medical goods Others period 2013—2016. However, the health 10% 9% Hospitals • sector is still heavily dependent on external Strengthen existing pooling mechanisms through the 34% public and private sectors. Administration funding, which is not sustainable. Therefore, 11% c) Thethe government should: results show that the bulk of the resources in the Preventive care health sector are spent at hospital level rather than on 17% Ambulatory • Raise ambulatory additional and prevention resources services. Further, spending from is 19% skewed towards infectious diseases, particularly HIV/AIDS alternative domestic sources. Among and STIs. The government should: the options, there should also be • Put in place resource allocation an effectivefocus increased formula on improving to optimize the allocation of resources by level of efficiency in the allocation and use of healthcare, and disease burden. Inefficient allocation does not only end at provider level, but the available resources. also extends to functional level, especially diseases. Table 2 shows that more than half (59 percent) of the total CHE in The 2013−2016 NHA survey was conducted by the University 2016 was spentMinistry of Health, Zambia NHA 2013-2016 Policy Brief – December 2018 3 on the treatment of infectious diseases. of Zambia with financial and technical support from the Further, spending on HIV/AIDS and STIs accounted for 34 percent of the total CHE in 2016, while Malaria accounted for World Bank Group (Health, Nutrition and Population 13 percent. This kind of spending can be explained by the Global Practice), the Department for International large portions of external funding that is earmarked to HIV/ Development (UK Government), and the United States AIDS and STIs. As a share of the total donor spending in the Agency for International Development (Systems for Better health sector (total donor CHE), about 70 percent was spent Health project). For more information please contact the on HIV/AIDS and STIs in 2015 and 2016 (table 2). Permanent Secretary, Ministry of Health, Ndeke House, Table 2: Percentage share of CHE by disease and Lusaka or visit http://www.moh.gov.zm/ conditions (%)   2013 2014 2015 2016 Infectious Diseases 68 58 63 59 HIV/AIDS and STIs 43 28 32 34 Tuberculosis 0 1 1 1 Malaria 15 16 18 13 Reproductive health 9 11 8 9 Nutritional deficiencies 1 1 1 1 Non-communicable diseases 8 11 10 10 Injuries 2 4 4 3 Percentage of total donor CHE     72 70 spent on HIV/AIDS 4 Zambia National Health Accounts 2013-2016 Policy Brief – December 2018